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BOISE, Idaho — Albertsons Cos. reported net earnings of $375.5 million, or 20 cents a share, for the fiscal third quarter ended December 3. That’s down from $424.5 million, or 74 cents a share, in the prior-year period. Adjusted net income was $505 million, or 87 cents per share, which beat the 66 cents FactSet consensus forecast.
Sales for the quarter were $18.2 billion, up from $16.7 billion last year, which also topped expectations. The increase was driven by the company’s 7.9% increase in identical sales (mainly due to retail price inflation) and higher fuel sales. Albertsons also reported that digital sales increased 33% and that membership in the company’s loyalty program increased 16% to 33 million.
“Our team continues to deliver strong performance as we execute against our Customers for Life strategy and bring people together around the joys of food and inspire well-being,” Albertsons chief executive officer Vivek Sankaran said. “Our investments in digital transformation, differentiation in Own Brands and Fresh offerings, and the modernization of our operational capabilities contributed to these results. I want to thank all of our teams for their commitment to serving our customers and living our values every day.”
Albertsons, which has agreed to merge with Kroger Co., is upbeat about its prospects going forward.
“As we look ahead to the balance of the year and into fiscal 2023, we believe that all of these initiatives position us well to continue to drive top-line growth and deepen our customer and community engagement both online and in-store,” Sankaran explained. “At the same time, our ongoing productivity engine is expected to continue to support our investments and partially offset anticipated inflationary cost increases, declines in COVID-19 vaccination and at-home test kit revenue, and macro-consumer headwinds.”
Gross margin rate decreased to 28.2% during the third quarter of fiscal 2022 compared to 28.9% during the third quarter of fiscal 2021, the company said. Excluding the impact of fuel and LIFO expense, gross margin rate decreased 47 basis points compared to the third quarter of fiscal 2021.
That decrease was primarily driven by increases in product, shrink and supply chain costs, a decline in COVID-related revenue due to administering fewer vaccines (which was partially offset by increased COVID at-home test kit revenue) and increases in picking and delivery costs related to the growth in digital sales (which were partially offset by the benefits of ongoing productivity initiatives).
Selling and administrative (S&A) expenses decreased to 25.0% of net sales and other revenue during the third quarter of fiscal 2022 compared to 25.4% during the third quarter of fiscal 2021. Excluding the impact of fuel, S&A expenses as a percentage of net sales and other revenue decreased 29 basis points.
The decrease in S&A expenses was primarily attributable to the benefit of ongoing productivity initiatives and sales leverage, partially offset by market-driven wage rate increases, investments related to the acceleration of Albertsons’ digital and omnichannel capabilities and merger-related costs.
