Albertsons Companies, Inc. ACI reported fourth-quarter fiscal 2024 results, with the top line increasing year over year and surpassing the Zacks Consensus Estimate. The bottom line declined year over year but beat the consensus mark.
The company delivered solid results in the fiscal fourth quarter, closing fiscal 2024 with positive momentum and continued investment in the Customers for Life strategy. This strategy has positioned it for future growth and value creation. Looking ahead, the focus will be on investments in the core business, including growth in digital platforms and the Albertsons Media Collective. While fiscal 2025 will be an investment year, growth is expected to align with long-term goals starting in fiscal 2026.
Albertsons Companies, Inc. Price, Consensus and EPS Surprise
Albertsons Companies, Inc. price-consensus-eps-surprise-chart | Albertsons Companies, Inc. Quote
Albertsons’ Quarterly Performance: Key Insights
Albertsons posted adjusted quarterly earnings of 46 cents per share, which surpassed the Zacks Consensus Estimate of 40 cents. However, the bottom line declined 14.8% from 54 cents per share reported in the prior-year period. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Net sales and other revenues of $18,799.5 million were above the Zacks Consensus Estimate of $18,627 million and rose 2.5% year over year. The year-over-year increase in the top line stemmed from a 2.3% increase in identical sales, with 18% increase in pharmacy sales serving as the main contributor. Digital sales grew 24% due to strong growth in first party sales.
Loyalty membership grew 15% to reach 45.6 million in the fourth quarter of fiscal 2024 compared with the same period in fiscal 2023.
Insight Into ACI's Margins & Expenses
The gross profit of $5.1 billion increased 0.1% year over year. However, the gross margin contracted 60 basis points (bps) year over year to 27.4% compared with 28% in the fourth quarter of fiscal 2023.
Excluding the impacts of fuel and LIFO expenses, the gross margin rate decreased 45 bps year over year. This decrease was primarily due to strong growth in pharmacy sales, which typically have a lower gross margin rate, and increased delivery and handling costs associated with rise in digital sales, partially offset by productivity initiatives. In the fourth quarter of fiscal 2024, incremental investments were also made in the customer value proposition, funded by benefits from productivity initiatives, including reduced shrink expenses.
In the fourth quarter, selling and administrative expenses jumped 2.5% to $4.8 billion and remained unchanged at 25.7% as a percentage of net sales and other revenues. Excluding the impact of fuel, the selling and administrative expense rate rose five bps year over year. This reduction was primarily due to lower merger-related costs and the leveraging of employee costs as well as depreciation and amortization, partially offset by higher business transformation costs. Continued productivity initiatives also contributed to lower selling and administrative expenses.
Adjusted EBITDA declined 6.6% year over year to $855.1 million while the adjusted EBITDA margin was 4.5%, down 50 bps year over year.
ACI’s Financial Snapshot
Albertsons ended the quarter with cash and cash equivalents of $293.6 million. The company’s long-term debt and finance-lease obligations totaled $7.8 billion as of Feb. 22, 2025, while total stockholders' equity amounted to $3.4 billion.
Capital expenditures for fiscal 2024 totaled $1.9 billion, primarily reflecting the completion of 127 store remodels, the opening of 11 new stores and ongoing investments in digital and technology platforms. For fiscal 2025, capital expenditures are expected in the range of $1.7-$1.9 billion. For the fourth quarter of fiscal 2024, the company paid a dividend of 15 cents per share on Feb. 7, 2025, to its stockholders of record as of Jan. 24, 2025.
On Dec. 11, 2024, the company raised the quarterly dividend by 25% from 12 cents to 15 cents per share. The next dividend payment is scheduled for May 9, 2025, for its shareholders on record as of April 25, 2025.
The board also authorized a share repurchase program of up to $2 billion of the company's common stock. Following this authorization, during the fiscal fourth quarter, ACI repurchased a total of 4.1 million shares of common stock for $82.5 million under the approved program.
ACI Stock Past Three-Month Performance
Zacks Investment Research
Image Source: Zacks Investment Research
Sneak Peek Into Albertsons’ Outlook
For fiscal 2025, the company expects identical sales growth in the range of 1.5-2.5% year over year, based on expected inflation between 1.5% and 2%.
Adjusted EBITDA is projected to be between $3.8 billion and $3.9 billion, reflecting planned investments partially offset by productivity improvements, and including approximately $65 million related to the company’s 53rd week. In fiscal 2024, adjusted EBITDA was $4 billion.
Adjusted earnings per share are anticipated to be in the range of $2.03-$2.16, including an estimated three cents per share impact from the 53rd week. The company reported adjusted earnings of $2.34 per share in fiscal 2024. Shares of the company declined 7.6% at yesterday’s close as the grocer issued a soft full-year profit outlook.
Shares of this Zacks Rank #3 (Hold) company have risen 1.5% in the past three months compared with the industry's growth of 4.9%.
Stocks to Consider
BJ's Wholesale Club Holdings, Inc. BJ offers a wide range of products and consistently provides significant savings on a typical basket of manufacturer-branded groceries compared with traditional supermarkets. The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for BJ's Wholesale Club’s current fiscal-year sales and earnings indicates a rise of around 4.4% and 5.8%, respectively, from the year-earlier levels. BJ delivered a trailing four-quarter earnings surprise of 12%, on average.
Kimberly-Clark Corporation KMB, principally engaged in the manufacture and marketing of a wide range of consumer products around the world, currently carries a Zacks Rank of 2. KMB delivered a trailing four-quarter average earnings surprise of 12.5%.
The Zacks Consensus Estimate for Kimberly-Clark’s current financial-year earnings indicates growth of 2.9% from the year-ago reported number.
United Natural Foods, Inc. UNFI is the leading distributor of natural, organic and specialty food and non-food products. It currently carries a Zacks Rank of 2. UNFI delivered a trailing four-quarter earnings surprise of 408.7%, on average.
The Zacks Consensus Estimate for United Natural Foods’ current fiscal-year sales and earnings indicates a rise of around 1.9% and 485.7%, respectively, from the year-earlier levels.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
