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Albertsons Companies, Inc. (ACI)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 performance delivered solid top-line growth alongside margin compression: net sales rose to $24.88B (+2.5% YoY) with identical sales +2.8%, but gross margin rate fell 70 bps to 27.1% and adjusted EPS declined to $0.55 from $0.66 YoY .
  • Against S&P Global consensus, ACI modestly beat on EPS ($0.55 vs $0.54*) and revenue ($24.88B vs $24.71B*), while EBITDA missed vs consensus ($1.111B adjusted vs $1.091B* estimate; consensus EBITDA basis shows $1.024B actual*) due to mix shift and investments (Values retrieved from S&P Global).
  • Guidance: raised FY2025 identical sales growth to 2.0–2.75% (from 1.5–2.5%), with adjusted EBITDA ($3.8–$3.9B), adjusted EPS ($2.03–$2.16), tax rate (23.5–24.5%), and capex ($1.7–$1.9B) unchanged .
  • Strategic positives included 25% digital sales growth, 20% pharmacy growth, and loyalty members up 14% to 47.3M; management emphasized productivity gains and price investments to restore grocery unit growth, framing 2025 as an investment year and 2026 as a return to long-term algorithm targets .

What Went Well and What Went Wrong

What Went Well

  • Strong customer engagement: identical sales +2.8%, digital sales +25%, and loyalty members up to 47.3M, highlighting traction across omnichannel platforms .
  • Pharmacy strength: ~20% growth propelled comps; management expects outsized pharmacy/digital growth to drive lifetime value, with e-commerce nearing break-even amid labor and picking efficiency gains .
  • Productivity offsetting costs: SG&A rate improved 63 bps ex-fuel YoY, aided by lower merger costs and employee cost leverage; shrink expense reductions cited as tailwinds .
  • “We delivered solid operating and financial performance… strong growth in our digital sales, pharmacy operations, and membership in our loyalty program” — CEO Susan Morris .

What Went Wrong

  • Margin compression: gross margin rate down 85 bps ex-fuel/LIFO (70 bps reported) on pharmacy mix and digital delivery/handling costs, plus price investments; adjusted EBITDA down to $1.111B from $1.184B YoY .
  • Earnings softness: adjusted EPS fell to $0.55 (vs $0.66 YoY) reflecting margin headwinds and higher effective tax rate (24.1% vs 22.3% YoY) .
  • Mix headwinds to persist: management reiterated near-term pressure from pharmacy/digital mix and surgical price investments; guidance cadence implies Q2 at lower end due to localized strike impact, with acceleration in H2 .

Financial Results

Core P&L metrics by quarter (oldest → newest):

MetricQ4 FY2024Q1 FY2025Q2 FY2025
Net Sales and Other Revenue ($USD Billions)$18.80 $24.88 $18.92
Diluted EPS ($)$0.29 $0.41 $0.30
Adjusted EPS ($)$0.46 $0.55 $0.44
Gross Margin (%)27.4% 27.1% 27.0%
SG&A (% of Sales)25.7% 25.4% 25.4%
Adjusted EBITDA ($USD Billions)$0.855 $1.111 $0.848

Operational KPIs (oldest → newest):

KPIQ3 FY2024Q4 FY2024Q1 FY2025Q2 FY2025
Identical Sales Growth (%)2.0% 2.3% 2.8% 2.2% (adj.)
Digital Sales Growth (%)23% 24% 25% 23%
Loyalty Members (Millions)44.3 45.6 47.3 48.7
Pharmacy Sales Growth (%)13% 18% 20% 19%

Consensus vs actual (Q1 FY2025; S&P Global):

MetricConsensusActualSurprise
Primary EPS ($)0.5407*0.55*+0.0093*
Revenue ($USD Billions)24.71*24.88*+0.17*
EBITDA ($USD Billions)1.091*1.024* (company adjusted EBITDA: $1.111)-0.067*

Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Identical Sales Growth (%)FY20251.5–2.5% 2.0–2.75% Raised
Adjusted EBITDA ($B)FY20253.8–3.9 3.8–3.9 Maintained
Adjusted EPS ($)FY20252.03–2.16 2.03–2.16 Maintained
Effective Tax Rate (%)FY202523.5–24.5 23.5–24.5 Maintained
Capital Expenditures ($B)FY20251.7–1.9 1.7–1.9 Maintained
Identical Sales Growth (%)FY2025 (Q2 update)2.0–2.75% 2.2–2.75% Raised lower-end
Adjusted EPS ($)FY2025 (Q2 update)2.03–2.16 2.06–2.19 Raised (ASR accretion)
Capital Expenditures ($B)FY2025 (Q2 update)1.7–1.9 1.8–1.9 Raised
Dividend ($/share)Quarterly$0.15 (paid Feb 7, May 9) $0.15 (paid Aug 8; declared July 15) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 FY2024, Q4 FY2024)Current Period (Q1 FY2025)Trend
E-commerce profitabilityDilutive but improving; 1P growth outpacing; 7–8% penetration Near break-even, improving via labor/transport gains; store-fulfillment efficiencies Improving
Pharmacy & GLP-1Core script & immunization growth; GLP-1 contribution increases; dilutive margin ~20% pharmacy growth; GLP-1 ~half of pharmacy comp; cross-shopping drives higher LTV Strong growth; profitability initiatives
Price investment & loyaltyPlan surgical price investments; loyalty simplification adds value Iterative, data-driven price investments; loyalty cash-off option adoption rising Ongoing, scaling
Productivity & AI$1.5B savings planned FY2025–FY2027; tech modernization SG&A leverage; shrink reductions; national buying to tailwind margins in H2 On track
Tariffs/macro>90% domestic sourcing; monitoring tariff impacts Minimal impact YTD; mitigation via sourcing and own brands Manageable
Retail media (AMC)Building platform; faster-than-market growth from small base Strong momentum: better ROAS, faster measurement, expanded inventory Accelerating
LaborDivision consolidation; wage pressure expected; store hygiene/closures normalizing Negotiations across ~120k associates; progress and ratifications underway ; tentative agreements reached regionally Progressing

Management Commentary

  • “Our e-commerce business is near break-even and improving… we invested in tools and systems to drive labor efficiency” — Sharon McCollam .
  • “Sequential improvement in grocery units… we’ll fund price investments over time as productivity provides a tailwind” — Susan Morris .
  • “Pharmacy customers visit four times more often and buy significantly more groceries… central fill expansion is reducing cost to serve” — Management .
  • “We expect adjusted EBITDA $3.8–$3.9B; FY2025 is an investment year, with algorithm entry in FY2026 (2%+ IDs; EBITDA growth higher)” — Management .

Q&A Highlights

  • Margin drivers: Gross margin decline tied to price investments, pharmacy mix, and digital delivery/handling costs; focus is on gross margin dollars/EBITDA dollars, not rate .
  • Price strategy: Modified Hi-Lo with iterative, data-driven optimization; leveraging national buying and vendor partnerships to fund price gaps surgically .
  • E-commerce path to profitability: Volume leverage, labor productivity, transportation efficiencies; store fulfillment model proximity as structural advantage .
  • Pharmacy cross-shopping: GLP-1s near-term dilutive but customers migrate to higher-margin baskets (protein, supplements); expanding high-margin services and central fill .
  • Guidance cadence: Q2 comps at lower end due to localized strike; expect H2 acceleration in grocery units .

Estimates Context

  • EPS and revenue modestly beat S&P Global consensus; EBITDA (consensus basis) missed versus actual EBITDA while company-adjusted EBITDA was higher, reflecting divergence in GAAP vs adjusted definitions. Expect analysts to recalibrate near-term margin assumptions for pharmacy/digital mix and price investments while maintaining higher H2 unit trajectory and productivity offsets (Values retrieved from S&P Global).

Key Takeaways for Investors

  • Near-term margin pressure is deliberate: management is funding unit growth via surgical price investments while maintaining SG&A discipline and scaling productivity (tailwind expected to build into H2) .
  • Digital and pharmacy growth are strategic moats: 25% digital and ~20% pharmacy growth are expanding customer lifetime value, with e-commerce nearing break-even and central fill improving pharmacy economics .
  • Guidance improved on comps; EPS/EBITDA maintained: focus on top-line acceleration and mix normalization over time; watch for further updates with H2 trajectory .
  • Retail media ramping: AMC is gaining momentum with improved ROAS and faster measurement; provides reinvestment fuel and data synergies across platforms .
  • Capital allocation supportive: dividend maintained; buybacks continued (ASR executed later in Q2 with EPS accretion) — underscores confidence in underlying value .
  • Labor risks managed: broad negotiations progressing; localized strike impact embedded in cadence; wage rate pressures offset by productivity and offshore/onshore optimization .
  • 2026 thesis: Entry into long-term algorithm (IDs 2%+, EBITDA growth > IDs) contingent on unit recovery, productivity tailwinds, and mix balance between grocery/pharmacy/digital .

Additional data and sources:

  • Q1 FY2025 8-K press release and exhibits .
  • Q1 FY2025 earnings call transcript .
  • Prior quarters: Q4 FY2024 8-K and call ; Q2 FY2025 8-K and call .
  • Dividend press release .