BOISE, Idaho - Albertsons (NYSE:ACI) Companies, Inc. (NYSE: ACI) disclosed its financial outcomes for the first quarter of fiscal 2024, concluding on June 15, 2024.
The grocery chain reported a slight miss on adjusted earnings per share (EPS) at $0.66, just below the analyst consensus of $0.67. However, the company's revenue slightly exceeded expectations, coming in at $24.27 billion against the predicted $24.15 billion.
The first quarter saw a modest 1.4% increase in identical sales and a notable 23% surge in digital sales. The company's loyalty program also expanded, with a 15% growth in membership reaching 41.4 million. Despite these positive trends, the company's net income for the quarter was $240.7 million, or $0.41 per share, a decline from the previous year's $417.2 million, or $0.72 per share.
This decrease is partly attributed to the company's strategic investments in digital and omnichannel capabilities, as well as higher operating expenses.
Albertsons CEO Vivek Sankaran attributed the performance to the company's "Customers for Life" strategy and investment in digital and omnichannel capabilities. He acknowledged the evolving economic and industry landscape and anticipated headwinds due to investments in associate wages and benefits, and the mix shift towards the lower-margin pharmacy and digital businesses. Sankaran expressed gratitude towards the company's teams for their commitment to customer service and community support.
The company's gross margin rate saw a slight increase to 27.8% compared to 27.7% in the same quarter last year. However, when excluding fuel and LIFO expense, the gross margin rate actually decreased by 22 basis points due to the growth in pharmacy sales, which carry a lower margin, and increased costs associated with digital sales growth.
Selling and administrative expenses rose to 25.9% of net sales, up from 25.0% in the prior year's quarter. This increase was largely due to the development of digital and omnichannel capabilities, merger-related costs, and higher employee and occupancy costs, partially offset by productivity initiatives.
Looking ahead, Albertsons anticipates continuing challenges from investments in wages and benefits, the growing impact of the pharmacy and digital segments, and the cycling of prior year food inflation. However, the company expects these to be partially mitigated by ongoing productivity initiatives.
The company's financial health remains solid, with capital expenditures of $543.0 million primarily allocated to store remodels, a new store opening, and continued investment in digital and technology platforms.
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