Albertsons’ Q4 Sees Higher Ecommerce Sales, Private-Brand Penetration

Albertsons Cos. has reported a 1.1 percent identical-sales increase for its fiscal 2018 fourth quarter, which ended Feb. 23, and a 1.0 percent rise for the full year, along with ecommerce sales growth of 52 percent and 83 percent during the fourth quarter and full year, respectively. The Boise, Idaho-based grocer also singled out its continued strong own-brand sales penetration, which reached 25.2 percent in the fourth quarter.

“We are very pleased with the trends in our business as demonstrated by our strong results in the fourth quarter and full year,” noted Albertsons President and CEO Jim Donald. “This performance in our core four-wall business is helping fund necessary investments into the business in both the four-wall and no-wall environments.”

The company’s sales and other revenue came in at $14 billion during the fourth quarters of both fiscal 2018 and fiscal 2017. Albertsons’ Q4 2018 ID sales increase was offset by lower sales related to store closures. Gross profit margin rose to 29 percent during the fourth quarter of fiscal 2018 compared with 28.1 percent during the fourth quarter of fiscal 2017.

Albertsons’ gross profit margin benefited from better-than-expected fuel gross profit margin during the fourth quarter of fiscal 2018. Excluding the impact of fuel, gross profit margin grew 50 basis points. The company attributed this increase primarily to improved shrink expense as a percentage of sales, which improved 40 basis points compared with the fourth quarter of fiscal 2017, and an improved product mix, including higher own-brands penetration.

Net income was $135.6 million during the fourth quarter of fiscal 2018, versus $388.3 million in the year-ago period. Adjusted EBITDA was $727.2 million, or 5.2 percent of sales, during the fourth quarter of fiscal 2018, compared with $712 million, or 5.1 percent of sales, last year. According to Albertsons, the increase in adjusted EBITDA primarily reflected the grocer’s ID performance, improvements in shrink expense and better-than-expected fuel margins, partly offset by higher employee-related costs during the fourth quarter of fiscal 2018.

For full-year fiscal 2018, sales and other revenue rose to $60.5 billion, versus $59.9 billion for fiscal 2017. Albertsons noted that the sales increase was mainly because of the company’s rise in ID sales and higher fuel sales, partly offset by lower sales related to store closures during fiscal 2018.

Gross profit margin grew to 27.9 percent during fiscal 2018, compared with 27.3 percent last year. Excluding the impact of fuel, gross-profit margin increased 70 basis points, which the company primarily attributed to improved shrink expense, lower advertising costs and an improved product mix, including higher own-brands penetration.

Full-year net income was $131.1 million during fiscal 2018, from $46.3 million during fiscal 2017, while adjusted EBITDA was $2.7 billion, or 4.5 percent of sales, during fiscal 2018, versus $2.4 billion, or 4 percent of sales, during fiscal 2017. Albertsons noted that the increase in adjusted EBITDA was mainly due to the company’s better ID sales performance, improvements in shrink expense, higher fuel margins, and the realization of cost reduction initiatives, partly offset by higher employee-related costs.

In other Albertsons news, the retailer recently pledged that 100 percent of its own-brand product packaging would be recyclable, reusable or industrially compostable by 2025.

“As we innovate and expand our own-brand lines, we always keep the overall impact of packaging in mind and seek out ways to improve sustainability for each and every product,” said Albertsons President of Own Brands Geoff White. “Our suppliers are strong partners in this effort and, in many cases, are leading the charge on reducing, reusing and decreasing plastic content.”

The company is also wrapping up a pilot on an innovative closed-loop recycling program at its Southern California division to repurpose suppliers’ plastic corrugate boxes into new ones. The division is working with a vendor to recycle #5 polypropylene crates that suppliers use to ship products such as fruits and vegetables. After the crates are emptied at the stores, the locations return bales of collapsed crates, which are then processed into plastic pellets by approved recyclers. The pellets are then used to manufacture new crates.

Albertsons operates 2,269 retail stores with 1,739 pharmacies, 397 associated fuel centers, 23 dedicated distribution centers, six Plated fulfillment centers and 20 manufacturing facilities. Its stores predominantly operate under the banners Albertsons, Safeway, Vons, Jewel-Osco, Shaw’s, Acme, Tom Thumb, Randalls, United Supermarkets, Market Street, Pavilions, Star Market, Carrs and Haggen, and it also owns New York-based meal-kit company Plated. The company is No. 3 on Progressive Grocer’s 2018 Super 50 list of the top grocers in the United States.