Albertsons’ first post-IPO quarterly earnings show strength

Albertsons, the “2020 Retailer of the Year,” issued its first fiscal quarter earnings report on July 27, the grocer’s first earnings statement since becoming a publicly-traded company on the New York Stock Exchange. The results show the company holding strong in the COVID-19 era, particularly on digital sales.

For the year-to-year 2019 vs. 2020 first-quarter comparison, the Boise-based retailer reported store sales growth of 26.5%, but pandemic-driven digital sales growth of 276%. Due to COVID-19-related demand, Albertsons decided to minimize promotional activity for most of its first quarter before increasing promotions again in late May. The company reported that this strategy increased its first-quarter gross profit margins to 29.8%.

Albertsons stated in its earnings news release that net income for the April 1 through June 30 quarter was $586 million. The adjusted EBITDA of $1.7 billion was an increase of 93% compared with the first quarter of 2019. The firm also said that it made about $615 million in COVID-19-related investments to provide protection for its staff and customers.

The spending included $275 million in “appreciation pay” for its front-line workers. Albertsons CEO Vivek Sankaran stated: “Their hard work and dedication have also allowed us to successfully navigate this extraordinary environment, and we have accelerated our digital and e-commerce strategy to adapt to market conditions.”

The company said it had approximately $402 million in capital expenditures for the quarter, including accelerated spending on its e-commerce infrastructure, store remodeling projects and “strategic technology.”

The firm’s $800 million IPO introduced stock on June 26 with an initial price of $16 per share, $2 to $3 less per share than anticipated. Since then, share price fluctuated between $14 and $16 during Albertsons’ first month of trading. The first-quarter earnings statement reported that the diluted net income per share was $1.00 and the adjusted net income per share was $1.35.

In comparison, for its first quarter, rival grocery-retailer Kroger reported its store sales were up 20% and digital sales were up 92% on a year-to-year basis, with diluted earnings per share of $1.22.

Albertsons was named “2020 Retailer of the Year” in the middle of July by the grocery trade periodical Supermarket News. Every year, the magazine’s editorial team chooses the grocer who best exemplifies innovation and excellence in retail.

“With the tremendous challenges faced by everyone in the retail industry since the beginning of 2020, it is a remarkable time to be named Retailer of the Year,” said President and CEO Vivek Sankaran in a press release. “On behalf of our team across our 2,200-plus stores, we are honored to be recognized with this award by Supermarket News. Our team is focused on growth, productivity, technology and culture, and through that framework, we are earning customer loyalty and delivering an easy, exciting and friendly shopping experience to our customers, whether they shop with us in our stores or online.

“We thank the team at Supermarket News and all of our customers and vendors for their support during this unprecedented time,” continued Sankaran. “It is our pleasure to be able to continue to serve our communities while our team works hard to promote the safety of our associates and customers and keep America fed. We are proud to have been recognized for our efforts.”

Albertsons was founded in 1939 in Boise by local resident Joe Albertson. The company went public for the first time in 1959. Part of the firm’s holdings were sold to CVS and SuperValu in 2006 and the rest was bought by a private-equity consortium led by Cerberus Capital Management. Albertsons was removed from the NYSE at the same time.

In 2013, Cerberus bought back many of the stores sold to SuperValu. The 2020 IPO marks the second time Albertsons has traded publicly on the NYSE. Today, Albertsons has over 2,250 grocery stores and drug stores, with 1,726 same-location pharmacies and 402 gas stations in 34 states, operating under 21 different brand names including Albertsons, Safeway, Shaws, Randalls and Jewel Osco.