BOISE, Idaho — Albertsons Companies, Inc. posted a strong start to fiscal 2025 with solid gains in digital engagement and pharmacy operations helping offset margin pressure, the company announced Tuesday. Identical sales rose 2.8% for the 16-week quarter ended June 14, prompting the grocery retailer to raise its full-year sales outlook.
Net sales grew 2.5% to $24.88 billion, while digital sales surged 25%, now accounting for 9% of the company’s grocery revenue. Membership in the company’s loyalty program climbed 14% year over year to 47.3 million, as consumers responded to enhanced digital tools and value offerings.
Net income was $236 million, or $0.41 per share, while adjusted net income came in at $319 million, or $0.55 per share. Adjusted EBITDA for the quarter was $1.11 billion, representing 4.5% of revenue.
“We delivered solid operating and financial performance while investing in our core operations and enhancing our customer value proposition,” said CEO Susan Morris during the company’s earnings call. “Our Customers for Life strategy continues to guide our investments in digital engagement, private brands, and productivity improvements.”
Digital Nears Breakeven; Pharmacy Posts 20% Growth
Albertsons made substantial progress on its five key strategic pillars: digital engagement, media growth, customer value, tech modernization, and productivity transformation. E-commerce grew 25% year-over-year, with Morris noting that the business is now “near breakeven and improving.”
Pharmacy sales were a standout, growing 20% versus the prior year and contributing significantly to the identical sales gain. Morris also spotlighted new digital tools like a “shop assist” feature and enhanced basket flexibility, as well as new private-label launches, including Overjoyed (health and wellness) and Chef’s Counter (fresh prepared meals).
Margins Compressed by Value Investments and Channel Mix
Gross margin declined to 27.1%, down 70 basis points year over year and 85 basis points when excluding fuel and LIFO impacts. CFO Sharon McCollam attributed the pressure to increased investments in value, mix shifts due to strong pharmacy and digital growth (which carry lower margins), and elevated delivery costs. However, these were partially offset by reductions in shrink and operating efficiencies.
Selling and administrative expenses declined to 25.4% of sales, down 63 basis points excluding fuel. McCollam credited the improvement to productivity gains, operating leverage, and lower merger-related costs, despite continued inflation and higher labor costs.
Capital Allocation: Investments Continue
Albertsons invested $585 million in capital expenditures during the quarter, completing 36 remodels, opening three new stores, and continuing to modernize its digital and tech infrastructure. The company returned $401 million to shareholders through dividends and the repurchase of 14.2 million shares.
Albertsons also completed a $600 million debt refinancing in March, reducing interest costs and extending maturities. Net interest expense declined to $141.8 million from $145.7 million a year ago.
Fiscal 2025 Outlook Raised for Identical Sales
The company raised its full-year identical sales growth forecast to a range of 2.0% to 2.75%, up from its prior range of 1.5% to 2.5%. Guidance for adjusted EBITDA ($3.8 billion to $3.9 billion), adjusted EPS ($2.03 to $2.16), and capital expenditures ($1.7 billion to $1.9 billion) remain unchanged.
McCollam said the company expects second-quarter identical sales to land at the low end of the new range, with momentum building in the back half of the year. “We continue to execute against our long-term algorithm of 2%+ identical sales and adjusted EBITDA growth in fiscal 2026,” she added.
Labor negotiations remain ongoing, with roughly 120,000 associates affected; Morris noted that nearly half are now covered under newly ratified contracts.
Despite margin compression, Albertsons’ strong loyalty growth, digital adoption, and operational discipline position it to deliver on its strategic and financial goals for the year.
