Albertsons Cos. Proves Its Worth With Q2 Earnings
Albertsons Cos. is proving why it is a hot commodity. Following a market share gain in the first quarter and news of its impending merger with The Kroger Co., the grocer has shared encouraging results for the second quarter of fiscal 2022, ending Sept. 10.
Net sales and other revenue was up to $17.9 billion for the quarter, compared to $16.5 billion during the same 12 weeks in 2021. The rise was driven by an uptick in identical sales and higher fuel sales, with price inflation driving the identical sales increase.
The identical sales increase was 7.4% and digital sales rose by 36%, while gross margin rate decreased to 27.9% due to increases in product and supply chain costs, increases in picking and delivery costs and fewer COVID-19 vaccines during the time period.
"Our team continued to deliver strong performance during the second quarter," said Vivek Sankaran, Albertsons Cos. CEO. "Throughout the quarter, we continued to invest in our digital transformation, our differentiation in Fresh, and the modernization of our capabilities. As we look ahead to the balance of the year, we believe we are well-positioned to further accelerate in each of these areas, as we continue to roll out our Customers for Life strategy.”
For second quarter, selling and administrative expenses were down to 25% of net sales and other revenue, compared to 25.6% year over year. The decrease was primarily attributable to ongoing productivity initiatives, as well as lower COVID-19-related expenses and sales leverage.
Net gain on property dispositions and impairment losses was $14.0 million during the second quarter of fiscal 2022 compared to $0.2 million during the second quarter of fiscal 2021.
Adjusted net income was $418.3 million, or $0.72 per share, compared to $369.5 million, or $0.64 per share in the second quarter last year. Adjusted EBITDA was 5.9% of net sales and other revenue, up from $965.4 million, or 5.8% of net sales and other revenue year-over-year.
“With ongoing productivity to support our investments and to cushion inflationary and consumer headwinds, we will continue to prioritize our investments in deepening our relationships with our customers and communities," said Sankaran. "Our teams' commitment to serving our customers is driving our performance while furthering our purpose to bring people together around the joys of food and to inspire well-being."
Last week, Kroger said it will acquire Albertsons for $34.10 a share, a total enterprise value of approximately $24.6 billion. The merger would give the companies nearly unprecedented scale and advantages to fend off competition from Walmart, Amazon and other retail giants.
The deal’s value includes the assumption of about $4.7 billion of Albertsons’ net debt. As part of the transaction, Albertsons will pay a special cash dividend of up to $4 billion to its shareholders.
Earlier this year, Albertsons launched a review of potential strategic alternatives to enhance its growth and stockholder value, essentially putting itself up for sale.
Boise, Idaho-based Albertsons operates more than 2,200 retail stores with 1,700-plus pharmacies, 402 associated fuel centers, 22 dedicated distribution centers and 20 manufacturing facilities. It operates stores across 34 states and the District of Columbia under 24 well-known banners, among them Albertsons, Safeway, Vons, Jewel-Osco, Shaw’s, Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market, Haggen, Carrs, Kings Food Markets and Balducci’s Food Lovers Market. Albertsons is No. 9 on The PG 100, Progressive Grocer’s 2022 list of the top food and consumables retailers in North America. Kroger is No. 4 on the list.
