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BOISE, Idaho — Albertsons Cos. cited strength in its digital and pharmacy operations in posting a better-than-expected 1.4% increase in second-quarter sales, to $18.5 billion.
The supermarket operator said identical-store sales increased 2.5% in the quarter ended September 9.
Digital sales were up 24%, and membership income got a boost from a 15% increase in subscriptions to its recently streamlined Albertsons for U loyalty program, which ended the quarter with 43 million members.
The company also cited accelerated growth in Albertsons Media Collective, its retail media arm.
Albertsons reported adjusted net income of $0. 51 per share, ahead of analysts’ expectations of $0.48 per share. But profitability was down, with net income of $146 million slumping nearly 45% from a year earlier.
CEO Vivek Sankaran warned that a revenue slowdown could be in Albertsons' future.
“As we look ahead to the balance of fiscal 2024, we expect to see continuing headwinds related to investments in associate wages and benefits, an increasing mix of our pharmacy and digital businesses, which carry lower margins, and an increasingly competitive backdrop,” Sankaran said. “We expect these headwinds to be partially offset by ongoing and new productivity initiatives.”
The company also faces uncertainty over decisions in three court cases — at the federal level and at the state level in Colorado and Washington — challenging Kroger Co.'s plan to acquire Albertsons. Losses in any of the legal proceedings could scuttle the deal.
Albertsons did not hold a second-quarter earnings call in light of the pending merger.
Albertsons agreed to be acquired by Kroger in October of 2022, but the deal has encountered significant pressure from antitrust regulators and state officials. The deal includes a walk-away deadline that would kick in when the merger deadline expires, unless both companies agree to continue pressing ahead. If they don’t, Albertsons would pocket $600 million from Kroger.
Kroger this week announced it has extended the expiration date of its tender offer to the close of business on October 22.
