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Full-year 2020 sales rose 11.6% to $69.69 billion, driven by 16.9% growth in identical sales and a 258% gain in digital sales, Albertsons said.

Albertsons marks ‘transformational year’ in fiscal 2020

CEO Vivek Sankaran says well-executed strategic plan fueled strong sales, earnings growth

Albertsons Cos. tallied double-digit gains in identical sales and saw digital sales surge over 250% in its 2020 fourth quarter and fiscal year.

For the 12 weeks ended Feb. 27, net sales and other revenue totaled $15.77 billion, up 2.2% from $15.44 billion in the 13-week fiscal 2019 fourth quarter, Albertsons said Monday. The Boise, Idaho-based grocer attributed the uptick mainly to an 11.8% year-over-year rise in identical sales, partially offset by the impact of the 53rd week a year ago and lower fuel sales.

Full-year 2020 net sales and other revenue, covering 52 weeks, climbed 11.6% to $69.69 billion from $62.46 billion in 53-week fiscal 2019. A 16.9% identical-sales increase drove results, despite a partial offset from lower fuel sales and the extra week in 2019, according to the company.

“As a result of our team’s execution, we delivered strong performance in the fourth quarter and record results for the year,” Albertsons President and CEO Vivek Sankaran told analysts in a conference call on Monday. “Our full-year results exceeded our outlook across all key metrics,” he said, adding that the retailer continued market-share gains in dollars and units during the fourth quarter. “Importantly, growth in Q4 remained strong across our geographies regardless of the level of COVID restrictions in place, giving us confidence in the sustainability of our competitiveness in the future.”


'2020 was also a transformational year for Albertsons Cos. We’ve deepened our relationships with customers and added many new ones through our execution in stores and through online channels.' — Vivek Sankaran, Albertsons Cos. President & CEO


Sankaran noted that Albertsons’ fiscal 2020 achievements came against the backdrop of the nation grappling with a global pandemic. The company has pitched in by its pharmacy teams administering 3.1 million COVID-19 vaccines as of April 23. Vaccinations are now available at all of the retailer’s pharmacy stores, which have been boosted by the hiring of 1,000 new associates and 2,000 pharmacy technicians.

“2020 was a difficult year for all of us, and our hearts go out to all those directly impacted by the virus. 2020 was also a transformational year for Albertsons Cos. We’ve deepened our relationships with customers and added many new ones through our execution in stores and through online channels. We accelerated digital transformation across our company. Almost every critical capability in our company is now enhanced with or enabled by technology,” he explained.

“We delivered our planned productivity target and we added to it. We further strengthened our culture, learning how to sustain the flexibility and speed that comes with being locally great while at the same time leveraging the scale benefit that comes with being nationally strong,” Sankaran said. “As I’ve mentioned throughout the year, our strategy is focused on building deep relationships with our customers. We support this strategy with our differentiated product offerings anchored in fresh and own brands, our breadth of assortment so they can complete their shop with us, everyday execution excellence in every store and a suite of omnichannel capabilities that allow customers to conduct their shopping with us in any way they want. Our enhanced loyalty program is also resonating with customers, as you provide them with personalized offerings and drive repeat shopping locations.”

Omnichannel efforts accelerate

Digital sales jumped 282% in the fourth quarter and ended up rising 258% for fiscal 2020, with Albertsons achieving more than 200% digital sales growth in each quarter during the year, Sankaran pointed out.

Drive Up & Go (DUG) curbside pickup sales soared over 1,000% in the fourth quarter and 865% for the full year. Albertsons added 343 DUG sites in the quarter, and the service is now available at 1,420 stores. The company expects to have DUG at about 2,000 stores by the end of fiscal 2021 — above its previous target of over 1,800 stores — with 98% coverage.

“We’re also extremely pleased about the profit curve in our digital business, particularly in Drive Up & Go. We are seeing our incremental DUG sales driving flow-through of mid- to high single digits, and we expect that to continue improving as our DUG business continues to scale,” Sankaran said. “In 2020, we saw significant acceleration in consumer preferences towards digital, and we drove a step change in our digital offerings to meet this demand. During the year, we invested over $300 million to accelerate our offerings and launch new capabilities. To enhance the customer experience, they’ve improved our on-time [picking] and delivery to 95%, enabling consistent on-time delivery and DUG pickups.”


Along with Drive Up & Go curbside service, Albertsons is expanding "walk up and go" digital fulfillment options, such as via in-store pickup counters and lockers and outdoor kiosks.

During fiscal 2020, Albertsons also launched a pilot of the Tortoise automated grocery delivery cart with Safeway in Northern California and tests of “walk up and go” e-commerce options such as in-store pickup counters and lockers and outdoor stand-alone kiosks. The company also is refining and expanding its micro-fulfillment center (MFC) operations.

“And we’re testing in market an integrated loyalty and e-commerce app offering an effortless ordering experience to a single interface. To improve the profitability of the business, we shifted delivery at many of our locations to third-party logistics providers to improve speed and lower costs. We improved our picking software, optimizing and standardizing the picking process to drive cost reduction to increase picks per hour and improved order prioritization,” Sankaran said. “From our two MFC installations, we have learned that the labor cost for orders can be dramatically reduced without compromising the breadth of assortment and the customization a customer can get from our stores. We’re opening our third MFC this week, and our plans for an additional six before the end of our fiscal year will bring our total to nine MFCs.”

In-store advancements

In the fourth quarter, identical sales in fresh foods outpaced that of competitors by 300 basis points.

“Standouts during the quarter were seafood, meat and floral, as customers continue to spend more time at home. This trend continues as we see customers supplementing their weekly stock-up shop filling in with fresh items in smaller trips during the week,” Sankaran told analysts in the call.

“We’re also working on some exciting changes to our meals program that will give us significant growth opportunities,” he added. “We’re expanding the rollout of our Ready Meals program in our United [Supermarkets] division to other divisions, where we make ready-to-eat, ready-to-heat and ready-to-cook meals in our stores.”

Albertsons added more than 1,200 products to its Own Brands private label portfolio in fiscal 2020, exceeding its target of 800 new items. “Much of the disruption in the supply chain at the start of the year has abated, and penetration continued to improve in Q4 and is now exceeding 25%,” Sankaran reported. “We continue to expect Own Brands penetration to reach 30% in the next few years. With gross margins approximately 1,000 basis points higher than national brands, this should increase our flexibility to grow the business going forward.”

Membership in Albertsons’ Just for U loyalty program grew over 20% year-over-year each quarter in fiscal 2020, reaching 24.5 million, with a 93.1% member retention rate. Just for U members spend 2.6 times more than non-enrolled customers, according to Sankaran, while the number of actively engaged customers — who spend nearly five times more — rose almost 10%.


Albertsons said Just for U loyalty members spend 2.6 times more than non-enrolled customers, and omnichannel customers spend at twice the rate of exclusively in-store shoppers.

“We closed 2020 with almost 11 million more identified households shopping our stores than in 2019, allowing us to understand which categories they’re purchasing with us, how often they're coming back to repurchase, how they’re progressing up the loyalty ladder and their incremental spend levels as they migrate from in-store to omnichannel engagement,” he said. “We ended fiscal 2020 with three times the number of omnichannel households compared to fiscal 2019. These households spend more with us and are more profitable. We also saw that as customers moved into omnichannel, they increased their spend in our stores, with a net growth of 20% of [these] households and the total spend rate two times that of an exclusively in-store shopper.”

Fiscal 2020 bottom line up despite pension plan impact

For the fiscal 2020 fourth quarter, Albertsons posted a net loss of $144.2 million, or 37 cents per diluted share, compared with net income of $67.8 million, or 12 cents per diluted share, in fiscal 2019. The fourth-quarter loss reflects $607.2 million charge related to the company’s withdrawal from the Food Employers Labor Relations Association and United Food and Commercial Workers (UFCW) Pension Fund and the Mid-Atlantic UFCW and Participating Pension Fund.

On an adjusted basis, net income in the quarter was $347.2 million, or 60 cents per diluted share, versus $194.2 million, or 33 cents per diluted share, in the prior-year period. Analysts, on average, had forecast adjusted earnings per share (EPS) of 51 cents, with estimates ranging from 46 cents to 58 cents, according to Refinitiv.

Albertsons’ full-year 2020 net earnings totaled $850.2 million, or $1.47 per diluted share, compared with $466.4 million, or 80 cents per diluted share, in 2019. Results reflect the $607.2 million combined pension plan charge from the fourth quarter plus a $285.7 million charge in fiscal 2020 third quarter related to the withdrawal from the UFCW Union-Industry Pension Fund.

Adjusted net Income for 2020 came in at $1.89 billion, or $3.24 per diluted share, versus $612.1 million, or $1.04 per diluted share, in 2019. Analysts’ consensus estimate was for adjusted EPS of $2.95, with projections running from $1.68 to $3.20.

“Because of the way 2020 played out — with some of the pantry-loading we saw early in fiscal 2020 — we think it’s appropriate to provide guidance through a two-year lens against 2019 to show the step-change improvement in our business,” Albertsons Chief Financial Officer Robert Dimond told analysts in the call.

“We expect identical sales on a two-year stacked basis to be in the range of approximately 9.5% to 11%. We expect adjusted EPS in the range of a $1.95 to $2.05 per share, which represents over 37% compound annual growth compared to 2019. We expect adjusted EBITDA in the range of $3.5 billion to $3.6 billion, representing compound annual growth of 13% as the midpoint of our range compared to 2019,” he said. “We also expect to spend $1.9 billion to $2 billion in capital expenditures, which includes incremental capital for high-ROI projects that include in store remodels that will have near-term paybacks as well as our continued acceleration of digital and technology investments.”

On average, analysts peg Albertsons fiscal 2021 adjusted EPS at $1.87, with estimates ranging from a low of $1.08 to a high of $2.12, according to Refinitiv.

During fiscal 2020, Albertsons opened nine new stores and completed 409 store upgrades and remodels, finishing the year with 2,277 retail stores in 34 states and the District of Columbia under such banners as 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. The company also operates 1,727 pharmacies, 400 associated fuel centers, 22 distribution centers and 20 manufacturing facilities.

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