Albertsons Cos.’ results for its second quarter of fiscal 2020 ended Sept. 12 included digital sales growth of 243% as customers continue to use the grocer’s e-commerce at significantly higher rates during the pandemic. This growth comes on top of the 276% digital sales increase reported in Q1 of fiscal 2020.
The grocer also posted Q2 identical-sales growth of 13.8%, diluted net income per share of 49 cents and adjusted net income per share of 60 cents, net income of $284.5 million, and adjusted EBITDA of $948.4 million, or 6% of sales, a 67% increase compared with the year-ago period.
“We continue to successfully execute against our strategic priorities, which translated into outstanding second-quarter results,” noted Albertsons Cos. President and CEO Vivek Sankaran. “We have a value proposition that is resonating with customers and driving market share gains across all of our markets. We are in the early stages of a transformation to become a modern, growing food retailer providing a wide assortment of high-quality fresh and essential goods to customers, and we remain well positioned to generate differentiated performance and deliver an excellent shopping experience.”
The company’s sales and other revenue grew 11.2% to $15.8 billion during second quarter of fiscal 2020, versus $14.2 billion last year. According to Albertsons, the increase was attributable to its double-digit rise in identical sales, partly offset by lower fuel sales. Identical sales benefited from the spectacular growth in digital sales, as well as higher store sales.
Albertsons’ gross profit margin grew to 29% during the second quarter of fiscal 2020 compared with 27.8% during the year-ago period. Excluding the impact of fuel, gross profit margin rose 85 basis points from last year. The company attributed the increase in gross profit margin primarily to continued improvements in shrink expense and sales leverage on advertising and supply chain costs, along with sales mix shifts.
Meanwhile, net income during the second quarter of fiscal 2020 declined from the $294.8 million logged during the second quarter of fiscal 2019, which included the benefit of gains related to sale leaseback transactions.
Adjusted net income during the second quarter of fiscal 2020 was substantially higher than $99.2 million, or 17 cents per share, reported for the second quarter of fiscal 2019, however, and the increase in adjusted EBITDA, from $567.6 million, or 4% of sales, in the year-ago period, was chiefly attributable to Albertsons’ identical-sales increase and the improved sales leverage it experienced in gross margin and selling and administrative expenses, according to the company.
For the 28 weeks ended Sept. 12, Albertsons’ sales and other revenue grew 17% to $38.5 billion, versus $32.9 billion during the year-ago period, driven by the company's 21% increase in identical sales and partly offset by lower fuel sales.
Albertsons’ gross profit margin rose to 29.5% during the first 28 weeks of fiscal 2020, compared to 27.9% last year. Excluding the impact of fuel, gross profit margin climbed 80 basis points.
The company’s adjusted EBITDA was $2,639.4 million, or 6.9% of sales, during the first 28 weeks of fiscal 2020, versus $1,444.4 million, or 4.4% of sales, during the first 28 weeks of fiscal 2019. Albertsons attributed this rise to its identical-sales increase and the improved sales leverage it experienced in gross margin and selling and administrative expenses.
During the first 28 weeks of fiscal 2020, the company spent $702.9 million in capital expenditures, including investments in strategic technology, ramped-up e-commerce investment, and the completion of 132 remodels.
Albertsons also detailed refinancing and debt reduction moves that are expected to save it about $52 million in annualized pre-tax interest expense.
Further, taking into account the “significant increases in product demand and overall basket size in [its] stores and … e-commerce business due in part to COVID-19 related demand,” the company updated its fiscal 2020 outlook as follows:
- Identical sales of at least 15.5%
- Adjusted earnings per share in the range of $2.75 per share to $2.85 per share
- Adjusted EBITDA in the range of $4.15 billion to $4.25 billion
- Capital expenditures to be about $1.9 billion
Boise, Idaho-based Albertsonsoperates 2,252 retail stores with 1,725 pharmacies, 398 associated fuel centers, 22 dedicated distribution centers and 20 manufacturing facilities. The company’s stores predominantly operate under the banners Albertsons, Safeway, Vons, Pavilions, Randalls, Tom Thumb, Carrs, Jewel-Osco, Acme, Shaw’s, Star Market, United Supermarkets, Market Street and Haggen. The company is No. 8 on The PG 100, Progressive Grocer’s 2020 list of the top food retailers in North America.