Grocery Ecommerce Sales Soar in Albertsons Q1

The Albertsons Cos. saw ecommerce sales more than double during the first quarter of its fiscal 2018, a period that also realized a small lift in identical sales and strong growth in private-label penetration.

During the period, which ended June 16, ecommerce sales, including those of meal kits under the Plated brand the company purchased last fall, grew 108 percent. Among the ecommerce-related grocery technology initiatives launched during the period, Albertsons Cos.:

• Launched a consumer-facing digital marketplace to help vendors grow their business by direct-shipping to the retailer’s customers while providing important customer data in various markets.
• Upgraded its United Supermarkets division's ecommerce platform to improve customer engagement and enhance metrics for the mobile shopper app, which should drive operational efficiencies.
• Hired former Kohl’s executive Gautam Kotwal as its new EVP and chief data and analytics officer, where he will be responsible for building out omnichannel operations.

Private-label penetration, meanwhile, grew by 56 basis points to 24 percent, with the grocer’s Own Brands program now including more than 400 new items. During Q1, the Boise, Idaho-based grocer said it was on track to launch 1,400 products in the program this year, a more-than-twofold increase over 2017’s private-label launches.

Overall in Q1, sales and other revenue rose $193.4 million, or 1 percent, to $18.7 billion compared to the $18.5 billion during Q1 2017. An increase in fuel sales of $154.1 million and the grocer’s 0.2 lift in identical sales drove the growth.

Gross profit margin increased to 27.7 percent in Q1 compared to 27.4 percent during the period a year prior. Excluding the impact of fuel, gross profit margin increased 60 basis points. Lower advertising costs, improved product assortment and lower shrink expense as a percentage of sales compared to Q1 2017 primarily drove the growth. Shrink expense improved sequentially by 45 basis points from Q4 2017.

"We are pleased with our first-quarter results as both identical sales and adjusted EBITDA increased for the second consecutive quarter," said Bob Miller, chairman and CEO. "We continue to roll out unique options for our customers as we strive to differentiate through our best in class own brands and rapidly expanding ecommerce offerings.”

Other Q1 News

Additionally:

• Full fiscal year guidance remains at 1.5 to 2 percent identical sales growth and adjusted EBITDA of $2.7 billion.

• Albertsons Cos. has converted 243 stores and is on track with completing Safeway store conversions by September, which should help further growth and enhance performance.

• The grocer spent approximately $350 million during Q1 (including approximately $37 million for Safeway integration-related capital expenditures) and completed 24 remodel projects while also opening two new stores.

• The Rite Aid-Albertsons Cos. merger is anticipated to realize $375 million in annual run-rate cost synergies within three years, and gives the opportunity to generate $3.6 billion in annual sales synergies to fuel future growth.

Albertsons Cos. operates 2,300 retail food and drug stores with 1,762 pharmacies, 397 associated fuel centers, 23 dedicated distribution centers, five Plated fulfillment centers and 20 manufacturing facilities. It operates stores under such banners as Albertsons, Safeway, Vons, Pavilions, Randalls, Tom Thumb, Carrs, Sav-On, Jewel-Osco, Acme, Shaw's, Star Market, United Supermarkets, Market Street, Amigos, Haggen and United Express. Albertsons Cos. holds the No. 3 spot on Progressive Grocer’s 2018 Super 50 list of top grocers in the United States.