Albertsons (ACI, Financial) has ended its fiscal year on a relatively stable note, despite a slight 1% decrease in its stock value. The company's fourth-quarter (Feb) earnings report revealed a modest increase in earnings per share (EPS) and a 0.4% year-over-year revenue growth, reaching $18.34 billion, aligning with expectations.
The anticipated merger with Kroger (KR, Financial) has led to a lack of usual fiscal guidance and the absence of a conference call, leaving some uncertainty about the company's outlook for the new fiscal year. Nevertheless, Albertsons provided some insights in their press release regarding future expectations.
Key highlights from the Q4 results include:
- Identical sales rose by 1%, a decrease from the 2.9% growth in the third quarter, with full-year identical sales up by 3%.
- The quarter saw a notable 24% year-over-year increase in digital sales, slightly up from the 21% growth in the previous quarter, driven by strong pharmacy sales.
- Gross margin improved slightly to 28.0% from 27.8% a year ago, although adjusted gross margin saw a 58 basis points decline due to several factors, including the growth in lower-margin pharmacy sales and increased digital sales costs.
- Albertsons plans to further invest in its digital capabilities to enhance its omnichannel experience, despite expecting challenges such as higher wages and benefits, significant food inflation from the previous year, reduced government assistance for customers, and a shift towards lower-margin pharmacy and digital sales.
Despite these efforts, the quarter's results and the forecasted headwinds, particularly in the first half of the new fiscal year, suggest a challenging period ahead for Albertsons. This report marks the smallest EPS upside in five years for the company, with a drop in identical sales growth compared to the previous quarter and the annual figure. The stock's downward trend since mid-January continues, with no significant change following this earnings report.
