Albertsons Raises Profit Guidance After Dropping Kroger Deal
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Albertsons Cos. raised its adjusted earnings outlook for the full year, a positive sign for the grocer seeking to pave a new path after its proposed deal with Kroger Co. fell apart.
The nation’s second-largest supermarket operator now expects adjusted earnings per share in the range of $2.25 to $2.31, up from as much as $2.30 previously.
The $24.6 billion deal ended late last year after a federal judge blocked it.
Kroger and Albertsons rank Nos. 26 and 42, respectively, on the Transport Topics Top 100 list of the largest private carriers in North America, and Kroger, Albertsons and C&S rank Nos. 3, 5 and 9, respectively, on the TT grocery carriers list.
Sankaran
The grocer is seeking growth as a stand-alone company at a time when price-sensitive consumers are prioritizing groceries and other necessities. Inflation has stabilized in recent months, but people’s budgets remain stretched.
Adjusted EPS for the quarter ending Nov. 30 was 71 cents, higher than what Wall Street analysts were forecasting. Still, costs associated with online orders weighed on profit margins. The company’s comparable sales growth slightly missed expectations. Fuel sales weighed on operations, though pharmacy and digital fueled the rise.
Albertsons also announced a 25% raise to its quarterly dividend.
The Boise, Idaho-based grocer runs over 2,200 stores across the U.S. under names like Safeway and Vons. After acquiring Safeway in 2015, it had tried to go public but canceled its plans twice before successfully doing so during the pandemic. Just about two years later, it agreed to be acquired by its bigger rival Kroger in October.
As a public company, Albertsons has been focusing on selling more fresh, higher-quality foods and centralizing how its divisions buy products. It remodeled stores, while growing its private-label business and investing in e-commerce. CEO Vivek Sankaran previously said that if the Kroger deal fell through, he would need to make tough decisions that could include layoffs, store closures or seeking another acquisition parter.
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Albertsons and Kroger said joining forces would help them compete better against Amazon.com Inc., Walmart Inc. and Costco Wholesale Corp., though the deal immediately drew opposition from elected officials and unions. The Federal Trade Commission later blocked the proposed tie-up, and a federal judge sided with regulators in December.
Albertsons has sued Kroger, claiming it failed to exercise best efforts to secure regulatory approval. It’s seeking billions of dollars in damages.
Going forward, Albertsons said it would focus on investing in stores, technology and staff while expanding its e-commerce and other areas of the business.
