<\/p>\n
Albertsons Companies (ACI) opened Thursday, July 23, at $12.50, more than $2 below Wednesday’s close of $14.60.\u00a0<\/p>\n
By midday, the stock traded near $11.38, down about 22% and sitting on a fresh 52-week low of$11.02.<\/p>\n
Grocery stocks are supposed to be the boring ones. People eat in good times and bad, which is why the sector gets treated as a place to hide when the economy wobbles.<\/p>\n
Thursday broke that assumption.<\/p>\n
The company that runs Safeway, Vons, Jewel-Osco, and 19 other banners told investors its shoppers are pulling back, and it cut its profit forecast by roughly 21%.<\/p>\n
What Albertsons actually reported in the first quarter<\/p>\n
According to Albertsons’ earnings release, the company earned $84.7 million, or 17 cents per share, in the 16 weeks that ended on June 20.\u00a0<\/p>\n
That’s down from $236.4 million and 41 cents a year earlier.<\/p>\n
Adjusted earnings came in at 42 cents per share against 55 cents last year.<\/p>\n
Revenue barely moved, rising 0.2% to $24.94 billion, and the increase came from fuel sales rather than groceries.<\/p>\n
Identical sales, which track stores open in both periods, fell 0.8%.<\/p>\n
That identical sales figure is the one that stung, because it means the same stores sold less food to the same shoppers.<\/p>\n
Albertsons said lower-income shoppers are trading down to private label and cheaper proteins, pressuring both units and basket sizes.<\/p>\n
Cheng Xin / Getty Images<\/p>\n
Why the guidance cut hit harder than the earnings miss<\/p>\n
Albertsons now expects adjusted earnings of $1.75 to $1.85 per share for fiscal 2026, down from $2.22 to $2.32.<\/p>\n
The midpoint of $1.80 lands well below the $2.27 analysts had predicted, Yahoo Finance reported.<\/p>\n
Adjusted EBITDA guidance dropped to a range of $3.55 billion to $3.625 billion from $3.85 billion to $3.925 billion.<\/p>\n
Identical sales guidance flipped from growth of 0% to 1% into a decline of 0.5% to 1.5%.<\/p>\n
A missed quarter is simply one bad report, but a guidance cut of this size tells investors the company expects the pressure to last through February.<\/p>\n
The consumer signal buried in the numbers<\/p>\n
Albertsons Chief Financial Officer Sharon McCollam gave the detail that matters most on the earnings call.<\/p>\n
She said the sales decline was sharpest among lower-income customers.\u00a0<\/p>\n
Albertsons saw weakness in both the number of items bought and the size of the basket, Yahoo Finance reported.<\/p>\n
More Retail Stocks:<\/p>\n
Kroger just shook up the supermarket landscapeKroger stock slide reveals bigger grocery problemKraft Heinz bet inflation peaked, but your cookout bill disagrees<\/p>\n
Chief Executive Susan Morris added that those shoppers are moving to private label, value packaging, and cheaper proteins.\u00a0<\/p>\n
She also said Albertsons is losing them mainly to Walmart (WMT), Amazon (AMZN), and Aldi.<\/p>\n
That is a market-share problem dressed up as a macro problem.<\/p>\n
Two adjustments soften the headline figure.\u00a0<\/p>\n
Pharmacy pricing tied to the Inflation Reduction Act cost about 100 basis points, and egg deflation cost another 50 basis points.<\/p>\n
Strip those out, and identical sales rose about 0.7%.<\/p>\n
The stock still fell 22%, which tells you Wall Street cared more about the trajectory than the adjustments.<\/p>\n
Albertsons is rebuilding its operating structure mid-slump<\/p>\n
Alongside the results, Albertsons announced ACI Edge, a restructuring that collapses 11 operating divisions into four regions covering California, the West, the South, and the East.<\/p>\n
Center-store merchandising, which is the packaged goods that fill the middle aisles, moves under a single enterprise team.<\/p>\n
Related: Kroger changed its loyalty rewards program, but shoppers need to be wary<\/p>\n
The company expects roughly $200 million in annual run-rate benefits, with most arriving in 2027 and about $50 millionin transition costs spread across two years.<\/p>\n
Morris said the savings will fund price investments rather than flow to the bottom line.<\/p>\n
She was also specific about what those investments are not.\u00a0<\/p>\n
Albertsons is not shifting to everyday low pricing and is not running broad discounts.<\/p>\n
Instead, the company is targeting particular markets and categories where shoppers compare prices closely.<\/p>\n
The CFO exit that complicated the earnings release<\/p>\n
Albertsons disclosed on the same day that McCollam, who joined in 2021 and serves as president and CFO, plans to retire later this year.<\/p>\n
Morris said Albertsons is searching for her successor and will consider both internal and external candidates.<\/p>\n
Announcing a turnaround plan, a guidance cut, and a CFO departure in one press release forces investors to consider all three at once. The market’s response was selling.<\/p>\n
What is actually working inside the business<\/p>\n
The quarter was not entirely weak, and three areas grew.<\/p>\n
Digital sales rose 13%, with digital penetration reaching nearly 10.5% of the business.E-commerce turned profitable in the quarter, including both first-party and third-party operations.Pharmacy is profitable on a stand-alone basis, with growth in scripts, immunizations, and clinical services.<\/p>\n
Retail media revenue also grew, helped by new display placements and sponsored product listings inside AI-powered search.<\/p>\n
The catch is that e-commerce carries a lower gross margin rate than in-store grocery, so growth there dilutes company margins, even while adding profit dollars.\u00a0<\/p>\n
Gross margin fell to 26.6% from 27.1%, driven largely by delivery and handling costs.<\/p>\n
Where Wall Street stood going into the report<\/p>\n
Analysts were already cautious. Before Thursday, eight analysts carried an average target of $17.43.<\/p>\n
Morgan Stanley’s Simeon Gutman held a sell rating with a $14 target as of July 16, while Telsey Advisory’s Joe Feldman maintained a buy with a $22 target on July 17.<\/p>\n
JP Morgan trimmed its target to $20from $22 on June 30 while keeping an overweight rating, GuruFocus noted.<\/p>\n
Every one of those targets was set against guidance that no longer exists, so expect revisions in the coming days.<\/p>\n
What investors should watch from here<\/p>\n
ACI now trades below every published analyst target, including Morgan Stanley’s Street-low $14.\u00a0<\/p>\n
However, that does not make it cheap, because the earnings base underneath it just moved.<\/p>\n
4 things need to happen before the Albertsons bullish case works:Identical sales turn positive on a reported basis, not just after adjusting for pharmacy and eggs.The $200 million in ACI Edge savings shows up on schedule in 2027.Price investments win back lower-income traffic, rather than simply lowering margins.A permanent CFO is named who can defend the new guidance.<\/p>\n
Albertsons will pay its next quarterly dividend of 17 cents per share on Aug. 7. The company also bought back13.4 million shares for $226.5 million during the quarter, part of a $2.0 billion buyback plan.<\/p>\n
Those returns are funded from a shrinking profit base, and the net debt ratio has climbed to 2.33 from 1.96 a year ago.<\/p>\n
For shoppers, the price cuts Albertsons described should show up on shelves in specific categories over the coming months.\u00a0<\/p>\n
For investors, the next real test is the second-quarter report, when management has to show whether shoppers keep buying cheaper options or start spending normally again.<\/p>\n
Related: Amazon has one weakness Walmart is quietly using against it<\/p>\n
#Albertsons #stock #hot #water #sobering #reveal<\/p>\n","protected":false},"excerpt":{"rendered":"
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