Albertsons Posts Q3 Profit Beat, Raises Full-Year Outlook

Albertsons Companies, Inc. (NYSE: ACI) reported strong third-quarter fiscal 2024 results, with notable growth across key metrics. The company achieved a 2.0% increase in identical sales and a significant 23% growth in digital sales. Net income reached $401 million ($0.69 per share), while adjusted net income was $420 million ($0.71 per share).

The company's loyalty program grew 15% to 44.3 million members, and Adjusted EBITDA was $1,065 million. Net sales increased 1.2% to $18.77 billion, primarily driven by pharmacy sales growth. The Board approved a 25% increase in quarterly dividend to $0.15 per share and authorized a new $2.0 billion share repurchase program.

Following the termination of the Kroger merger agreement due to legal challenges, Albertsons has filed a lawsuit seeking damages and a $600 million termination fee. The company updated its fiscal 2024 outlook, projecting identical sales growth of 1.8-2.0% and adjusted EBITDA of $3.95-3.99 billion.



Albertsons' digital sales growth of 23% in the third quarter of fiscal 2024 outpaces industry averages, indicating successful omnichannel adaptation and investment in its Customers for Life strategy. The primary drivers behind this growth include increased digital engagement across the company's platforms, investments in digital capabilities and technologies, and a focus on enhancing the value proposition for customers through digital channels.



| Metric | Q3 FY2024 | YoY Change |
| --- | --- | --- |
| Net Sales | $18.77B | +1.2% |
| Identical Sales | +2.0% | |
| Digital Sales | +23% | |
| Net Income | $401M ($0.69/share) | |
| Adjusted Net Income | $420M ($0.71/share) | |
| Loyalty Program Members | 44.3M | +15% |
| Adjusted EBITDA | $1,065M | |

Albertsons delivered a mixed Q3 FY2024 performance with key metrics showing both strengths and challenges. The 1.2% increase in net sales and 2.0% growth in identical sales indicate modest growth, while the 23% surge in digital sales and 15% growth in loyalty membership to 44.3M demonstrate successful digital transformation efforts. However, gross margin compression to 27.9% and lower Adjusted EBITDA margin at 5.7% (vs. 6.0% YoY) signal mounting cost pressures. The termination of the Kroger merger agreement and subsequent legal proceedings introduce significant strategic uncertainty. The $2.0B share repurchase authorization and 25% dividend increase to $0.15 per share suggest management's confidence in standalone operations.

The Q3 results reflect shifting consumer behavior patterns and market dynamics. Digital sales acceleration of 23% outpaces industry averages, indicating successful omnichannel adaptation. The growth in pharmacy sales suggests effective healthcare service integration, though it's pressuring margins. The updated FY2024 guidance narrowing identical sales growth to 1.8-2.0% from 1.8-2.2% indicates cautious consumer spending. However, the raised Adjusted EBITDA guidance to $3.95-3.99B demonstrates operational efficiency improvements. The company's strategic pivot following the merger termination, combined with robust capital return plans, positions it for autonomous growth in a competitive retail landscape. The termination of the Kroger merger agreement marks a pivotal shift in Albertsons' corporate trajectory, introducing legal complexity and strategic uncertainty. The company's immediate pivot to shareholder returns through increased dividends and share repurchases appears strategically timed to maintain investor confidence amid this legal uncertainty.