Jan 7 (Reuters) – Albertsons forecast tepid annual identical sales and adjusted net income on Wednesday, after a disruption in SNAP benefits hit the U.S. grocer’s third quarter and its pharmacy business braced for a hit from drug price renegotiations. The company said the brief lapse in food stamp benefits in November due to the U.S. […]
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Albertsons forecasts tepid annual sales, profit on lower drug prices, SNAP hit
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Jan 7 (Reuters) – Albertsons forecast tepid annual identical sales and adjusted net income on Wednesday, after a disruption in SNAP benefits hit the U.S. grocer’s third quarter and its pharmacy business braced for a hit from drug price renegotiations.
The company said the brief lapse in food stamp benefits in November due to the U.S. government shutdown lowered identical sales by about 10 to 20 basis points in the third quarter.
A lowering in Medicare drug prices, which came into effect in January, was also expected to weigh on its fiscal 2025 identical sales by about 16 to 18 basis points, the grocer said.
Albertsons’ pharmacy business benefited in the reported quarter from demand for its immunization products, GLP-1 therapies and core prescriptions, which partly helped offset the impact from delayed food stamp benefits, the company said.
U.S. consumers, particularly from lower- and middle-income households, have traded down to cheaper products, and have become more conscious about big spending, wary of still-high inflation and economic uncertainty.
Even higher-income consumers were “becoming more conscious of price and value, selecting a broader shift towards cautious discretionary spending,” Albertsons’ CEO Susan Morris said on a post-earnings call.
Albertsons expects annual identical sales growth of between 2.2% and 2.5%, which was lower at the midpoint compared with its earlier target range of 2.2% to 2.75%.
It also expects adjusted net income in the range of $2.08 to $2.16 per Class A common share, compared to the previous range of $2.06 to $2.19 per share.
“Competitive pressure from Walmart, Clubs and hard discounters isn’t making it any easier for Albertsons to stabilize market share and margin rate,” said Michael Montani, analyst at Evercore ISI.
Albertsons reported quarterly revenue of $19.12 billion, short of analysts’ estimates of $19.17 billion, according to data compiled by LSEG.
It logged quarterly adjusted net income of 72 cents per share for the three months ended on November 29, compared with an estimate of 68 cents.
The company’s shares were down about 2% in early trading.
(Reporting by Sanskriti Shekhar and Juveria Tabassum in Bengaluru; Editing by Maju Samuel and Shailesh Kuber)