Loyalty can pay off in the long run, and for Albertsons that run appears to have gotten off to a great start.
Crediting the effectiveness of the Boise, Idaho-based company’s Customers for Life strategy, Albertsons checked in with solid numbers for the first quarter of FY 2023.
Identical sales were up 4.9% year-over-year during the first quarter that ended June 17, which helped produce $24.1 billion in net sales and other revenue. Digital sales, up 22% compared to first quarter 2022, also provided a major boost, and loyalty numbers increased 16% to 35.9 million.
“As we look ahead to the balance of the year, we remain focused on driving operational excellence in our stores and continued growth in our digital and pharmacy operations,” said Albertsons CEO Vivek Sankaran. “We will also continue to drive the initiatives supporting our Customers for Life strategy, including delivering on our customer promises, deepening our relationships with them, and serving them where, when, and how they want to be served.
“We are also mindful of the evolving economic backdrop, including slowing food inflation, declining government assistance and higher interest rates, and their potential effects on consumer spending and our business.
“We also expect to see ongoing labor investment, broad inflationary cost increases and significant declines in COVID-19 vaccination and test kit revenue. These headwinds, however, are expected to be partially offset by the benefits of our productivity initiatives.”
Net income came in at $417 million for the quarter and adjusted net income was $546 million. Adjusted EBITDA was just over $1.3 billion. Those numbers were off compared to 2022, when Albertsons recorded a net income of $484.2 million, an adjusted net income of $545.7 million and an adjusted EBITDA of just over $1.4 billion.
Albertsons gross margin rate finished at 27.7% (91 basis points) in the first quarter compared to 28.1% during Q1 of 2022. Pharmacy, behind the drop in COVID-19 vaccination and test kit revenue, was responsible for almost half of the rate decrease, with the rest attributed to shrink inventory, picking and delivery costs related to the continued growth in digital sales, and warehouse costs.