Albertsons banks on pharmacy in Q3 as pricing pressures mount

BOISE, Idaho — Albertsons Companies reported modest sales growth in the third quarter of fiscal 2025, with pharmacy emerging as the main driver as consumers across income levels became more price-conscious.

Net sales and other revenue increased by 1.9% to $19.1 billion for the quarter ending Nov. 29, while identical sales grew 2.4%. The company stated that growth was primarily driven by pharmacy, which helped offset weaker discretionary spending and pressure from delayed SNAP benefit distributions during last autumn’s federal government shutdown. The SNAP disruption is estimated to have reduced identical sales by 10 to 20 basis points.

Pharmacy momentum persisted even as broader shopping behaviors shifted. CEO Susan Morris stated that lower-income customers are buying fewer items per trip and focusing more on essentials, while middle-income shoppers are beginning to cut back in certain categories. Higher-income customers remain relatively steady but are becoming more price- and value-conscious.

“Pharmacy remains a key growth driver for us,” Morris said during the company’s earnings call, highlighting prescription demand and increased engagement through loyalty and digital tools.

Digital sales increased by 21% year over year, driven partly by pharmacy-related fulfillment and repeat purchases, with digital penetration reaching approximately 9.5%. Loyalty memberships grew 12% to 49.8 million members. Morris highlighted the company’s expanding use of artificial intelligence, including its “Ask AI” search tool, which she said has increased basket size among users and boosted engagement across digital and pharmacy touchpoints.

President and CFO Sharon McCollam stated that Albertsons expects its e-commerce division to become profitable by the end of fiscal 2025, excluding retail media revenue.

Looking ahead, the company warned that pharmacy sales will encounter challenges in the upcoming quarters due to Medicare drug price cuts under the Inflation Reduction Act, which took effect January 1, 2026. McCollam mentioned that the changes are expected to decrease identical sales by about two-thirds of a percentage point in the fourth quarter and by 16 to 18 basis points for the full fiscal year.

As a result, Albertsons lowered its fiscal 2025 outlook, now predicting identical sales growth of 2.2% to 2.5%, down from its previous forecast of 2.2% to 2.75%.

Net income for the quarter was $293 million, or $0.55 per share, compared to $401 million, or $0.69 per share, a year earlier. Adjusted net income was $390 million, or $0.72 per share, and adjusted EBITDA totaled $1.04 billion.

Despite short-term pharmacy reimbursement pressures, Morris said the company’s investments in pharmacy, digital infrastructure, and personalized engagement position Albertsons to generate long-term value as healthcare and retail continue to merge.