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Albertsons Companies, Inc. (ACI)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 fiscal 2024 delivered steady top-line growth and digital/pharmacy momentum: Net sales rose to $18.80B, identical sales +2.3%, digital +24% and pharmacy revenue +18% .
  • Gross margin rate compressed to 27.4% (vs. 28.0% prior year) on pharmacy mix and digital delivery/handling costs; SG&A rate held flat at 25.7% year-over-year .
  • EPS context: Diluted EPS was $0.29 and adjusted EPS $0.46; the quarter beat Wall Street consensus on both EPS and revenue by modest amounts, while entering FY25 as an “investment year” with guidance implying lower margins near term (see Estimates Context and Guidance) .
  • Capital allocation and catalysts: Board reaffirmed quarterly dividend of $0.15 per share, initiated $2.0B buyback authorization (Q4 repurchases $82.5M) and refinanced $600M notes; leadership transition to incoming CEO Susan Morris highlights continuity of “Customers for Life” strategy .

What Went Well and What Went Wrong

  • What Went Well

    • Digital and loyalty flywheel: e-commerce grew 24% in Q4 (penetration >8%), loyalty members up 15% to 45.6M; management sees outsized growth opportunities vs peers .
    • Pharmacy strength and customer lifetime value: pharmacy revenue +18% in Q4; cross-shoppers carry 4x baskets and are strategic to long-term engagement .
    • Productivity offsets: Ongoing initiatives in shrink reduction, store labor tools, automation and WMS rollout helped fund customer value investments and mitigate margin mix headwinds .

  • What Went Wrong

    • Margin pressure from mix and investments: Gross margin rate fell to 27.4% (vs 28.0% y/y) on pharmacy mix and digital delivery/picking costs; FY25 set as an investment year with expected near-term margin headwinds .
    • Wage inflation and competitive intensity: SG&A pressure persists given higher multi-year wage contracts and promotional environment amid mass/club strength .
    • Asset impairments: Net loss on property dispositions and impairments of $36.4M in Q4 (vs $0.8M y/y) weighed on operating income .

Financial Results

MetricQ4 FY2023Q2 FY2024Q3 FY2024Q4 FY2024
Revenue ($USD Billions)$18.34 $18.55 $18.77 $18.80
Diluted EPS ($)$0.43 $0.25 $0.69 $0.29
Adjusted EPS ($)$0.54 $0.51 $0.71 $0.46
Gross Margin (%)28.0% 27.6% 27.9% 27.4%
SG&A (% of Revenue)25.7% 25.8% 25.1% 25.7%
Adjusted EBITDA ($USD Millions)$915.8 $900.6 $1,065.1 $855.1

Consensus vs Actual (Q4 fiscal 2024):

MetricConsensusActual
Revenue ($USD Billions)$18.79*$18.80
Primary EPS ($)$0.41*$0.46
# of Estimates (EPS / Revenue)20* / 16*—

Notes: Values retrieved from S&P Global.*

KPIs and Operating Drivers:

KPIQ2 FY2024Q3 FY2024Q4 FY2024
Identical Sales Growth (%)2.5% 2.0% 2.3%
Digital Sales Growth (%)24% 23% 24%
Loyalty Members (Millions)43.0 44.3 45.6
Pharmacy Revenue Growth (%)—13% 18%
Owned Brands Penetration (%)——25.4%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Identical Sales Growth (%)FY2025N/A1.5%–2.5% Introduced
Adjusted EBITDA ($USD Billions)FY2025N/A$3.8–$3.9 (incl. ~$65M 53rd week) Introduced
Adjusted EPS ($)FY2025N/A$2.03–$2.16 (incl. ~$0.03 53rd week) Introduced
Effective Tax Rate (%)FY2025N/A23.5%–24.5% Introduced
Capital Expenditures ($USD Billions)FY2025N/A$1.7–$1.9 Introduced
Quarterly Dividend ($/share)Q1 FY2025$0.12 (Dec ’24) $0.15 (declared Apr 15, ’25) Raised 25%

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 FY2024)Previous Mentions (Q3 FY2024)Current Period (Q4 FY2024)Trend
AI/Technology & Data PlatformClosed micro-fulfillment centers; continued digitization Cloud migration, pricing tools, self-checkout AI, WMS rollout Real-time data platform enabling AI for pricing, personalization, vision AI to reduce shrink Expanding AI use across ops; productivity benefits building
Supply Chain & Automation—Targeting 30% automated distribution volume; WMS rollout by YE ’25 Reinforced automation/WMS, cost-to-serve improvements Execution underway; automation scale-up
Tariffs/MacroTariffs listed as risk factor Tariffs noted in risk disclosures Task force, >90% domestic sourcing; monitoring fluid situation Watching; not embedded in FY25 guide
Pricing & Value PropositionHeadwinds expected from mix and competitive backdrop Value investments alongside productivity Surgical price investments by market/category; loyalty breadth Ongoing; funded by productivity
Digital/Loyalty/AMC24% digital growth; loyalty program benefits Loyalty, omni households, AMC platform investments 24% digital growth; >8% penetration; AMC to grow faster than market Scaling engagement; AMC monetization building
Pharmacy & Health—Core scripts, GLP-1s; Sincerely Health Pharmacy revenue +18%; GLP-1 customer basket evolution Stronger volumes; margin dilution improving over time

Management Commentary

  • “We delivered solid results in the fourth quarter… continued to invest in our Customers for Life strategy.” — CEO Vivek Sankaran .
  • “Loyalty membership grew by over 15%… to more than 45 million members.” — Incoming CEO Susan Morris .
  • “Q4 gross margin was 27.4%… decrease driven by pharmacy mix and incremental digital delivery/handling costs, partially offset by productivity.” — President & CFO Sharon McCollam .
  • “From FY25–FY27, we expect to ratably deliver $1.5B in productivity savings.” — Incoming CEO Susan Morris .
  • “We will be making investments in the first half of the year… expecting those investments to start paying off towards the back half.” — President & CFO Sharon McCollam .

Q&A Highlights

  • Pricing strategy: Surgical price investments by market/category using elasticity tools; consumers seeking value and promotions; SNAP pressure noted .
  • Tariffs exposure: >90% of products procured domestically; monitoring fluid situation with task force and mitigation plans .
  • E-commerce profitability: Dilutive but improving with scale; first-party growth, batching and picking productivity; nearing EBITDA contribution when combined with 3P .
  • GLP‑1 dynamics: GLP‑1 contributes to pharmacy comp but carries lower profitability; basket shifts toward more profitable categories (protein, produce, supplements) and pill form could expand opportunity .
  • FY25 cadence: Investments weighted to H1; growth expected to improve in H2; progression toward long-term algorithm (IDs ≥2%, EBITDA > IDs) in FY26 .

Estimates Context

  • Q4 fiscal 2024 beats: EPS $0.46 vs $0.41 consensus; revenue $18.80B vs $18.79B consensus; 20 EPS estimates and 16 revenue estimates indicated. Modest beats reflect resilient traffic and digital/pharmacy growth against mix headwinds. Values retrieved from S&P Global.*
  • Forward lens: FY25 guidance implies investment-driven near-term margin pressure; estimates likely to adjust for higher SG&A and pharmacy/digital mix, with later-year improvement tied to productivity and AMC monetization .

Key Takeaways for Investors

  • Digital-engagement flywheel is working: sustained high-teens-to-20s% digital growth, loyalty expansion, and AMC build-out underpin multi-year monetization .
  • Pharmacy is a strategic growth driver despite margin dilution: +18% revenue growth, higher CLV from cross-shoppers, GLP‑1 customer evolution supports store baskets .
  • FY25 is an investment year: expect near-term margin pressure (mix and value investments) offset by productivity and pricing analytics; improvement skewed to H2 .
  • Productivity roadmap credible: $1.5B savings through FY27 (buying scale, division consolidation, automation, WMS, AI shrink tools) should fuel value investments and earnings leverage .
  • Capital returns and balance sheet flexibility: $0.15 dividend, $2.0B repurchase authorization with ~$100M executed to date; net debt ratio ~1.9x provides optionality .
  • Leadership continuity: incoming CEO Susan Morris (homegrown operator) reinforces operational execution and strategy consistency—a stabilizing factor post-merger termination .
  • Trading implications: modest Q4 beats with conservative FY25 setup; look for H1 investment headwinds, H2 acceleration in IDs and early AMC revenue traction as catalysts to estimate revisions .

Notes: Values retrieved from S&P Global.*