Albertsons' earnings are better than expected, but stock is still down
Albertsons reported better-than-expected earnings Tuesday, but that didn’t stop investors from sending the stock down 9.75%.
The Boise-based grocery chain reported increases in sales for the third quarter of fiscal year 2021, driven mostly by higher grocery prices and COVID-19 vaccinations at store pharmacies.
"We also want to thank our pharmacy teams who have administered 11,000,000 COVID-19 vaccines, including approximately 3,000,000 in quarter three," Albertsons CEO Vivek Sankaran told investors on Tuesday's earnings call.
Sales at brick-and-mortar stores rose 5.2% over a year ago, and the company touted a 9% increase in digital sales. Adjusted earnings beat investor expectations, at $0.79 per share.
Sales expectations for the remainder of the fiscal year were increased as well, but the company is still forecasting a year-over-year sales decline for this fiscal year, which ends in February.
Inflation and supply chain headaches continue to weigh on Albertsons, as do staffing challenges. Increased costs ate into revenue growth from productivity and other improvements, said Vice President and Chief Financial Officer Sharon McCollum. "These increases were largely offset, however, by lower gross margin rate due to the rate impact of increased product costs driven by the current inflationary environment as well as higher supply chain costs," she said, referencing an improvement in the company's gross profit margins compared to Q3 of 2020.
Market analysts say those struggles will likely continue to impact the company and the broader retail industry longer than previously expected.
Shares of Albertsons (ABI) fell Tuesday to $28.79, the first time it was below $29 since October 2021. The company operates 2,278 retail stores nationwide, including Albertsons, Safeway, Jewel-Osco, Vons and other brands.