Albertsons raises annual sales and profit forecast on strong pharmacy, digital growth

Audio By Carbonatix

Enlarge

By Prerna Bedi

(Reuters) -Albertsons raised its full-year profit and sales forecasts on Tuesday, citing resilient demand at its pharmacies and continued growth in online orders, sending its shares up about 8% in early trading.

The Boise, Idaho-based grocer is capitalizing on surging demand for same-day delivery and winning market share from traditional drugstore closures, while inflation-hit shoppers increasingly choose private-label products, supporting its own-brand performance.

The company’s pharmacy business jumped 19% year-over-year in the quarter, driven by strong sales of GLP-1 medications and customer migration from shuttered competitor locations, CEO Susan Morris told investors on a conference call.

“Higher engagement of omnichannel households helps to drive incremental lifetime value, especially when bundled with pharmacy purchases,” Evercore ISI analyst Michael Montani said.  

Albertsons now expects annual adjusted earnings per share of $2.06 to $2.19, up from $2.03 to $2.16, and identical sales growth of 2.2% to 2.75%, from 2.0% to 2.75%.

The ongoing price pressure from Walmart, warehouse clubs, and hard discounters is weighing on Albertsons’ margin and market share trajectory, Montani added. 

Spending on loyalty programs and discounts lifted digital sales 23% but pressured profitability, with gross margin slipping to 27.0% from 27.6% a year earlier. 

The company reported second‑quarter sales for the quarter ended September 6 of $18.92 billion, narrowly beating market expectations of $18.9 billion, according to data compiled by LSEG.

Adjusted profit was 44 cents per share, above analysts’ expectations of 40 cents.

The company also increased its share buyback plan by $750 million.

(Reporting by Prerna Bedi in Bengaluru; Editing by Tasim Zahid)