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Albertsons' Shopping Cart Filled With Good News

Adjusted earnings beat estimates on the back of strong productivity gains

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Apr 12, 2022
Summary
  • Productivity gains and pharmacy bolster margins.
  • Online sales dip as more consumers return to stores.
  • CEO Vivek Sankaran claims ‘Our strategy is working.’
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Albertsons Companies Inc. (

ACI, Financial) overcame both a scarcity of labor and higher costs to beat sales and earnings estimates in its fourth quarter of fiscal 2021. On Tuesday, the Boise, Idaho-based company reported results for its fourth quarter and full year of fiscal 2021, which ended on Feb. 26, 2022. It also provided a fiscal 2022 outlook.

Revenue came in at $17.4 billion for the quarter compared to revenue of $15.8 billion during the prior-year quarter. The increase was driven by the company's 7.5% increase in identical sales and higher fuel sales, with retail price inflation contributing to the identical sales increase.

Net income was $455.1 million or 79 cents per share on a GAAP basis, which included the $78.7 million (14 cents per share) gain, net of tax, related to the Combined Plan withdrawal. This was far above the net loss of $144.2 million, or 37 cents per share, during the fourth quarter of fiscal 2020, which included the $449.4 million (97 cents per share) charge, net of tax, related to the Combined Plan withdrawal.

Adjusted net income was $436.8 million, or 75 cents per share on an adjusted basis, during the fourth quarter of fiscal 2021, compared to $347.2 million, or 60 cents per share, during the fourth quarter of fiscal 2020. Adjusted Ebitda was $1.07 billion during the fourth quarter of fiscal 2021 compared to $916.9 million during the fourth quarter of fiscal 2020.

Gross margins remained largely unchanged (not counting spiraling fuel costs) thanks to gains in productivity and improved margins in its pharmacy operations.

Shortly before noon on Tuesday, shares were trading at $32.71, down 5.64% despite the good news.

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Notable in the report is the fact that online sales during the quarter dropped to just 5% of sales, reflecting Americans’ declining wariness about the pandemic and return to brick-and-mortar retailers. During the early days of the pandemic, online sales spiked as much as 287%. The slowdown in online ordering is similarly affecting competitors like The Kroger Co. (

KR, Financial), Weis Markets, Inc. (WMK, Financial), Walmart Inc. (WMT, Financial) and privately-held Stop & Shop.

Albertsons operated 2,276 retail stores with 1,722 pharmacies, 402 associated fuel centers, 22 dedicated distribution centers and 20 manufacturing facilities as of Feb. 26, 2022. The company operates stores across 34 U.S. states and the District of Columbia. It has 24 brands, including 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.

"We are pleased with our fourth quarter and full-year 2021 results and the continuing momentum we are seeing as we enter 2022," said CEO Vivek Sankaran in a statement. "Our strategy is working, and we are executing well against industry-wide pressures. We want to recognize and thank all of our retail, distribution and manufacturing teams for their commitment to and care of our customers and their communities."

Albertson’s fiscal 2022 outlook calls for mostly identical sales in fiscal 2022, up approximately 2% to 3%, with adjusted Ebitda in the range of $4.15 billion to $4.25 billion and adjusted earnings per share in the range of $2.70 to $2.85. Also ahead, executives said, will be an effective tax rate in the range of 23% to 24%, excluding discrete items.

Management also foresees capital expenditures in the range of $2.0 billion to $2.1 billion. They warned that they were unable to provide a full reconciliation of the GAAP and non-GAAP measures used in the fiscal 2022 outlook “without unreasonable effort because it is not possible to predict certain of the adjustment items with a reasonable degree of certainty.”

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