Albertsons Cos. topped the high end of Wall Street’s earnings-per-share forecast for its fiscal 2021 third quarter as the supermarket giant tallied robust gains in net and identical sales.
For the 12-week quarter ended Dec. 4, net sales and other revenue climbed 8.6% to $16.73 billion from $15.41 billion a year earlier, Albertsons reported Tuesday. The Boise, Idaho-based food and drug retailer said the growth reflects a 5.2% year-over-year uptick in identical sales, as well as higher fuel sales, sales from new and acquired stores, retail price inflation and incremental sales from administering COVID-19 vaccines.
Albertsons posted net and comparable sales increases in the third quarter after gains of 4.7% and 1.5%, respectively, in the fiscal 2021 second quarter and atop growth of 9.3% in net sales and 12.3% in identical sales in the fiscal 2020 third quarter.
“In Q3 2021, ID sales increased 5.2% and 17.5% on a two-year stack. We also gained unit and dollar market share in food and MULO [multi-outlet retail channel] on both a one- and two-year basis,” President and CEO Vivek Sankaran told analysts in a conference call on Tuesday.
E-commerce remained a catalyst in the third quarter. Digital sales advanced 9% — exceeding the second quarter’s 5% increase — and were up 234% over two years, including 225% growth in the 2020 third quarter.
“During the [third] quarter, we continued to see the benefits from our digital and omnichannel investments, including the ongoing expansion of Drive Up & Go [curbside pickup] and the opening of our first Midwest micro-fulfillment center,” Sankaran said. “Omnichannel households increased by four times versus Q3 2019, and sales retention remained strong. As omnichannel households spend three times more than in-store-only shoppers, we’ve continued to increase our investments in digital, omnichannel and loyalty, which drove increased identified households and higher customer engagement and retention.”
Including Drive Up & Go site additions in the third quarter, Albertsons Cos. now covers 96% of households in its market areas with first-party pickup offerings.
“We also rolled out faster pickup options and, heading into the fourth quarter, over 80% of our households are now able to receive the Drive Up & Go orders in two hours,” Sankaran added. “In online delivery, we have established several third-party partnerships to meet the differing needs of our customers. Through these partnerships, we’re able to accelerate the speed of delivery while reducing delivery costs per order and allow customers to combine our delivery with an additional delivery from another retailer or restaurant in one trip through DoubleDash. We’re also testing other new experimental pilots and concepts for last-mile delivery.”
Membership in Albertsons Cos.’ Just for U loyalty rose 17% year over year during the third quarter to 28 million. Sankaran noted that actively engaged members — those who redeem grocery and/or fuel rewards — on average spend four times more than nonactive members and have a retention rate of more than 93%.
Albertsons administered 3 million COVID-19 vaccines in Q3, bringing its overall total to 11 million.
The quarter also saw continued growth in Albertsons’ Own portfolio. Sales penetration increased 15 basis points year over year to 25.1%, with the strongest performance in the floral, deli and foodservice departments. For the fiscal year to date, the retailer has introduced 540 new products, including 143 in the third quarter, and is on track to launch more than 800 for the full year.
“We also want to thank our pharmacy teams, who have administered 11 million COVID-19 vaccines, including approximately 3 million in quarter three,” Sankaran said.
At the bottom line, Albertsons posted fiscal 2021 third-quarter net income of $424.5 million, or 74 cents per diluted Class A common share, compared with $123.7 million, or 20 cents per diluted Class A common share, a year ago. Adjusted net income came in at $457.2 million, or 79 cents per diluted Class A common share, versus $386.6 million, or 66 cents per diluted Class A common share, in the prior-year period.
Analysts, on average, had projected adjusted EPS of 59 cents for the 2021 third quarter, with estimates ranging from a low of 49 cents to a high of 74 cents, according to Refinitiv.
Looking ahead, Albertsons is showing “agility and creativity” in navigating elevated inflation, supply chain challenges and labor shortages, according to Sankaran.
“Our strong performance year-to-date and the continuing positive trends give us the confidence to raise the fiscal 2021 outlook for ID sales, adjusted EBITDA and EPS,” he said.
For fiscal 2021, Albertsons now forecasts identical sales to decline by 0.8% to 1.2%, less than the previously projected decrease of 2.5% to 3.5%, with two-year stacked growth of 15.7% to 16.1% versus the earlier guidance of 13.4% to 14.4%.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) is pegged at $4.25 billion to $4.30 billion, up from the prior outlook of $3.95 billion to $4.05 billion. Adjusted net income (Class A common shares) is now forecast at $2.90 to $2.95 per share, compared with $2.50 to $2.60 previously. Wall Street’s consensus estimate is for full-year adjusted EPS of $2.61, with projections running from $2.29 to $2.89, according to Refinitiv.
Albertsons also pared its capital expenditure outlook to $1.8 billion to $1.9 billion from the prior guidance of $1.9 billion to $2 billion. Through the end of the third quarter, the company completed 146 remodels and opened nine new stores.
As of Dec. 4, Albertsons Cos. operated 2,278 food and drug stores in 34 states and the District of Columbia under more than 20 banners, such 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 1,722 pharmacies, 399 fuel centers, 22 distribution centers and 20 manufacturing facilities.