Executive Summary

Modest top-line and EPS beat alongside margin mix pressure: Revenue $18.92B vs S&P $18.89B* and adjusted EPS $0.44 vs S&P $0.40*, while gross margin fell 60+ bps YoY on pharmacy/digital mix and price investments offset by SG&A productivity .
Demand drivers: adjusted identical sales +2.2% (2.1% unadjusted), digital +23%, pharmacy strength (GLP‑1, share gains), loyalty members +13% to 48.7M -.
Guidance: raised FY25 identical sales (2.2%–2.75%) and adjusted EPS ($2.06–$2.19); adjusted EBITDA unchanged at $3.8–$3.9B (incl. ~$65M from 53rd week); capex nudged up to $1.8–$1.9B .
Capital allocation catalysts: announced $750M ASR (≈8% of shares) and enlarged buyback to $2.75B; dividend maintained at $0.15; post‑quarter priced $1.5B of new notes (5.50% 2031; 5.75% 2034) .

What Went Well and What Went Wrong

What Went Well
- Pharmacy and digital outperformed, driving comps and engagement; management highlighted GLP‑1 strength, vaccine momentum, and digital features like Ask AI; e‑commerce is “near break‑even” with store‑based fulfillment advantage - -.
- Productivity engine delivered SG&A leverage (ex‑fuel −50 bps YoY) funding price investments; management reiterated a $1.5B savings program through FY27 and detailed AI/automation use cases - .
- Shareholder returns: $550.1M YTD buybacks and a $750M ASR; board authorization raised to $2.75B; dividend declared at $0.15 .
What Went Wrong
- Gross margin rate 27.0% (−63 bps ex‑fuel and LIFO) on pharmacy/digital mix and price investments despite productivity offsets .
- Adjusted EBITDA down YoY to $848M and EBITDA margin 4.5% (vs 4.9% LY), reflecting mix headwinds and continued investment .
- Slight estimate guidance discrepancy: press release raised FY25 adj. EPS to $2.06–$2.19, while on the call CFO referenced $2.16–$2.19; investors should anchor to the filed 8‑K .

Financial Results

Note: Q2 2026 corresponds to the 12 weeks ended September 6, 2025.

Metric	Q2 2025 (YoY comp)	Q1 2026 (Seq prior)	Q2 2026 (Current)
Revenue ($B)	$18.55	$24.88	$18.92
Gross Margin %	27.6%	27.1%	27.0%
Selling & Admin %	25.8%	25.4%	25.4%
Adjusted EBITDA ($MM)	$900.6	$1,111.0	$848.4
Adj. EBITDA Margin %	4.9%	4.5%	4.5%
Diluted EPS (GAAP)	$0.25	$0.41	$0.30
Adjusted EPS	$0.51	$0.55	$0.44

KPIs

KPI	Q2 2025	Q1 2026	Q2 2026
Identical Sales Growth	—	+2.8%	+2.2% adj. (2.1% unadj.)
Digital Sales Growth	—	+25%	+23%
Loyalty Members (MM)	—	47.3	48.7

Vs. S&P Global Consensus (Q2 2026)

Metric	Consensus*	Actual	Surprise
Revenue ($B)	$18.89*	$18.92	+$0.03B (beat)
Adjusted EPS	$0.40*	$0.44	+$0.04 (beat)
EBITDA ($MM)	$825.0*	$848.4	+$23.4 (beat)

Note: S&P Global also reports an “actual” EBITDA of ~$827.6MM in its standardized series; company-reported adjusted EBITDA is $848.4MM, which we use for company comparisons . Values with an asterisk (*) are from S&P Global.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Identical Sales Growth	FY 2025	2.0%–2.75%	2.2%–2.75%	Raised (lower bound)
Adjusted EBITDA	FY 2025	$3.8B–$3.9B (incl. ~$65M 53rd week)	$3.8B–$3.9B (incl. ~$65M 53rd week)	Maintained
Adjusted EPS	FY 2025	$2.03–$2.16	$2.06–$2.19	Raised
Effective Tax Rate	FY 2025	23.5%–24.5%	23.5%–24.5%	Maintained
Capital Expenditures	FY 2025	$1.7B–$1.9B	$1.8B–$1.9B	Raised (lower bound)
Dividend	Quarterly	$0.15 declared May & Aug	$0.15 declared for Nov 7, 2025	Maintained

Discrepancy note: CFO referenced $2.16–$2.19 on the call; filed 8‑K and press release state $2.06–$2.19. Use filed guidance for modeling .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q2 2026)	Trend
AI/Technology Modernization	Emphasized core platform, digital growth; FY24 digital +24% -. Q1: digital +25% focus; investments in tech -.	Expanded use cases (Ask AI, price/promo, merchandising with OpenAI), India tech center; AI for shrink, labor, real estate analytics - .	Accelerating adoption
E‑commerce	Q1: +25% growth; nearing breakeven .	+23% growth; “near break‑even”; store‑based fulfillment advantages -.	Improving profitability
Pharmacy/GLP‑1	Q4/Q1: pharmacy as key comp driver .	Outperformed; GLP‑1 and vaccine strength; new customers from competitor closures; initial basket dip recovers, margin‑accretive mix -.	Strong growth; mix dilutive to GM
Pricing/Value	Q1: investments in value proposition .	Surgical price investments funded by productivity; personalized loyalty discounts emphasized .	Active; measured
Productivity Program	Q4/Q1: cost initiatives, shrink reduction .	On track for $1.5B FY25–FY27; SG&A leverage −50 bps ex‑fuel; offshore hubs in Manila/India - .	Ongoing delivery
Macro/Tariffs	FY24 risk factors cited -.	Minimal tariff impact; ~90% domestic sourcing; mitigation via sourcing/vendor partnerships .	Neutral
Capital Allocation	Q1: $314.8M buybacks; dividend $0.15 .	$550.1M YTD buybacks + $750M ASR; leverage ~2.2x post‑ASR; flexibility for capex/M&A - .	Shareholder‑friendly

Management Commentary

“It is a new day at Albertsons… investing with purpose, modernizing capabilities through scalable technology… The $750 million accelerated share repurchase… underscores our conviction in the value of our business.” — CEO Susan Morris .
“Adjusted identical sales grew 2.2%... digital sales +23%... adjusted EBITDA $848 million and EPS $0.44” — CEO Susan Morris (prepared remarks) .
“Gross margin decreased 63 bps vs last year due to mix (pharmacy, digital)… SG&A rate improved 50 bps ex‑fuel… we expect continued discipline” — President & CFO Sharon McCollam .
“We announced a $750 million ASR… net debt to adjusted EBITDA ratio will be ~2.2x” — President & CFO Sharon McCollam -.
“We’re getting closer to break‑even to profitability in e‑commerce… our proximity solves last mile and enhances freshness” — CEO Susan Morris .

Q&A Highlights

Pricing strategy: “Aggressive” but “surgical” by category/market; offset via vendor funds and productivity; loyalty/personalized discounts not captured in surveys .
Gross margin mix: Pharmacy and digital (highest LTV customers) drive YoY rate pressure; productivity funds price investments; expect similar margin dynamics in back half -.
Pharmacy dynamics: New customer wins from competitor closures; GLP‑1 customers show initial basket dip that recovers with margin‑accretive categories (protein, fresh produce) -.
Capital allocation: ASR does not preclude capex or M&A; leverage remains flexible post‑ASR .
E‑commerce unit economics: Near breakeven; proprietary systems optimize in‑store picking; remodels retrofit for e‑commerce space .

Estimates Context

Q2 2026 actuals compared to S&P Global consensus: revenue $18.92B vs $18.89B* (beat), adjusted EPS $0.44 vs $0.40* (beat). S&P’s standardized EBITDA indicates ~$825.0MM consensus and ~$827.6MM actual; company-reported adjusted EBITDA was $848.4MM, highlighting definitional differences . Values with an asterisk (*) are from S&P Global.

Key Takeaways for Investors

Slight top‑line and EPS beat driven by pharmacy and digital; mix dilution to gross margin persisted but was offset by SG&A productivity, supporting earnings resilience .
FY25 guidance raised on comps and EPS; investors should model to filed EPS range $2.06–$2.19 despite call commentary; EBITDA outlook unchanged, implying continued mix headwinds near term .
Structural drivers remain intact: digital +23%, loyalty up to 48.7M, e‑commerce near breakeven, and AI‑enabled productivity — set‑ups for FY26 “algo” with 2%+ comps and improving EBITDA growth trajectory - - .
Capital return is a tangible catalyst: $750M ASR (~8% of shares) and $2.75B total authorization provide downside support; dividend sustained at $0.15 .
Watch list: pharmacy mix on gross margin, pace of SG&A savings realization, unit inflection from price investments, and any updates to litigation/merger‑related costs captured in non‑GAAP adjustments - -.
Balance sheet/liquidity: follow-through on notes refinancing (5.50% 2031; 5.75% 2034) and ABL usage to manage maturities and rate mix .
Near-term trading implication: narrative skewed positive on buyback and guide-up; print was “clean beat” on EPS/revenue but margin mix remains a debate — stock likely sensitive to evidence of unit acceleration and further productivity delivery - .

Footnotes:

All company financials and commentary cited from the Q2 FY2025 earnings press release/8‑K and earnings call transcript - - and prior quarters - -.
S&P Global consensus and “actual” in estimates table marked with an asterisk (*) are values retrieved from S&P Global.

Albertsons Companies, Inc. (ACI)·Q2 2026 Earnings Summary