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Albertsons sees Q1 sales slip after cycling pandemic-fueled gains

Supermarket giant cites strong two-year growth through COVID-19 impact

Russell Redman

July 29, 2021

4 Min Read
Albertsons Marketplace-Jun2019-2636_copy.jpg
Albertsons said identical sales grew 16.5% and digital sales climbed 276% in the first quarter on a two-year stack basis.Albertsons Cos.

Lapping pandemic-driven gains from a year ago, Albertsons Cos. saw fiscal 2021 first-quarter sales fall by double digits and reported key financial results on a two-year stacked basis to better illustrate its performance since the crisis.

Albertsons’ earnings per share in the quarter, meanwhile, topped Wall Street’s projection on both a reported and adjusted basis.

For the 16 weeks ended June 19, net sales and other revenue totaled $21.27 billion, down 6.5% from $22.75 billion a year earlier, Albertsons said Thursday. The decrease stemmed mainly from a 10% decline in identical sales due to periods of elevated demand at the onset of COVID-19, partially offset by higher fuel sales, the Boise, Idaho-based grocer noted. In the fiscal 2020 first quarter, net sales jumped by 21.4% and identical sales by 26.5%.

Albertsons said first-quarter 2021 identical sales excluding fuel were up 16.5% on a two-year stack. Digital sales growth was “sustained” in the quarter and climbed 276% on a two-year basis, the retailer reported. First-quarter 2020 e-commerce sales also had surged by 276%.

Vivek Sankaran-Albertsons-masked-produce dept.png“We had a strong start to the year as we continued to execute our strategy,” President and CEO Vivek Sankaran (left) said in a statement (photo courtesy of Albertsons Cos.). “Our performance is clear evidence of the structural enhancements we have made to our business, as well as our ability to retain market share gains compared to pre-pandemic levels. We are closer to our customers than ever before and are well-positioned for continued success as we execute on our strategic priorities, leveraging our strengths in fresh, own brands and our accelerating digital transformation.”

Related:Albertsons reaches 6 million COVID-19 vaccinations

To help drive e-commerce expansion, Albertsons added over 320 new Drive Up & Go curbside pickup locations during the first quarter. The retailer said it had 1,740 total Drive Up & Go locations by the end of the quarter, and its digital order fulfillment performance stood at 95% on-time picking and delivery.

Albertsons also continued to expand its Own Brands private-label portfolio. The first quarter saw the grocer add 318 new items, raising Own Brands sales penetration to over 25%. In addition, the Just for U loyalty program's membership increased 18% to 26.7 million members. Actively engaged loyalty households grew 13% in the quarter, and Albertsons noted that engaged omnichannel customers spent four times more than exclusively in-store shoppers.

On the earnings side, Albertsons posted first-quarter 2021 net income of $444.8 million, or 78 cents per diluted Class A common share, compared with $586.2 million, or $1.00 per diluted Class A common share, a year ago. Adjusted net earnings came in at $517.5 million, or 89 cents per diluted Class A common share, versus $801.2 million, or $1.35 per diluted Class A common share, in the 2020 quarter.

Related:Uber Eats extends grocery delivery reach with Albertsons

Analysts, on average, had forecast Albertsons’ adjusted first-quarter 2021 earnings per share at 67 cents, with estimates ranging from 59 cents to 77 cents, according to Refinitiv.

Albertsons said first-quarter net income had compound annual growth of 201.3% on a two-year stack, with gains of 212.2% per Class A common share on a GAAP basis and 72.2% per Class A common share on an adjusted basis.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) fell 22.6% to $1.31 billion in the 2021 first quarter but were up 22.1% on a two-year stack, Albertsons reported. Similarly, gross margin excluding fuel rose 10 basis points in the quarter and, on a two-year basis, grew 90 basis points. Selling, general and administrative expenses excluding fuel were up 115 basis points in the quarter yet down 75 basis points on a two-year stack.

Looking ahead, Albertsons raised its earnings and sales guidance for fiscal 2021. The company now projects full-year adjusted net EPS (Class A common shares) of $2.20 to $2.30, up from the previous estimate of $1.95 to $2.05.

Wall Street’s consensus fiscal 2021 adjusted EPS estimate is $1.98, with projections running from $1.08 to $2.23, according to Refinitiv.

Albertsons forecasts identical sales to decline 5% to 6%, compared with its earlier outlook of a 6% to 7.5% decrease. The updated identical-sales guidance represents two-year stacked growth of 10.9% to 11.9% versus 9.4% to 10.9% previously. Capital expenditures remain at $1.9 billion to $2.0 billion.

In the 2021 first quarter, Albertsons’ capital spending totaled $513.4 million, including digital and technology investments, the opening of five new stores and the completion of 33 store remodels.

As of the quarter’s end, Albertsons Cos. operated 2,278 retail food and drug 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 retailer’s operations also include 1,725 pharmacies, 399 fuel centers, 22 distribution centers and 20 manufacturing facilities.

*EDITOR'S NOTE:  Article updated with more e-commerce, customer loyalty and Own Brands information.

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About the Author

Russell Redman

Senior Editor
Supermarket News

Russell Redman has served as senior editor at Supermarket News since April 2018, his second tour with the publication. In his current role, he handles daily news coverage for the SN website and contributes news and features for the print magazine, as well as participates in special projects, podcasts and webinars and attends industry events. Russ joined SN from Racher Press Inc.’s Chain Drug Review and Mass Market Retailers magazines, where he served as desk/online editor for more than nine years, covering the food/drug/mass retail sector. 

Russell Redman’s more than 30 years of experience in journalism span a range of editorial manager, editor, reporter/writer and digital roles at a variety of publications and websites covering a breadth of industries, including retailing, pharmacy/health care, IT, digital home, financial technology, financial services, real estate/commercial property, pro audio/video and film. He started his career in 1989 as a local news reporter and editor, covering community news and politics in Long Island, N.Y. His background also includes an earlier stint at Supermarket News as center store editor and then financial editor in the mid-1990s. Russ holds a B.A. in journalism (minor in political science) from Hofstra University, where he also earned a certificate in digital/social media marketing in November 2016.

Russell Redman’s experience:

Supermarket News - Informa
Senior Editor 
April 2018 - present

Chain Drug Review/Mass Market Retailers - Racher Press
Desk/Online Editor 
Sept. 2008 - March 2018

CRN magazine - CMP Media
Managing Editor
May 2000 - June 2007

Bank Systems & Technology - Miller Freeman
Executive Editor/Managing Editor
Dec. 1996 - May 2000

Supermarket News - Fairchild Publications
Financial Editor/Associate Editor
April 1995 - Dec. 1996 

Shopping Centers Today Magazine - ICSC 
Desk Editor/Assistant Editor
Dec. 1992 - April 1995

Testa Communications
Assistant Editor/Contributing Editor (Music & Sound Retailer, Post, Producer, Sound & Communications and DJ Times magazines)
Jan. 1991 - Dec. 1992 

American Banker/Bond Buyer
Copy Editor
Oct. 1990 - Jan. 1991 

This Week newspaper - Chanry Communications
Reporter/Editor
May 1989 - July 1990

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