Key Albertsons Metrics
- Albertsons comparable sales increased +6.8% and management raised its full-year comp outlook by 100 bps to +3%-4%, as was the earnings guidance. According to the company, July comps have growing in the mid-single-digit range.
- Omnichannel household growth was +34% and in-store transactions increased. Placer.ai data shows that traffic was up at Safeway (+3%) and Pavilions (+1%) and down modestly at Albertsons and Vons.
- Just-for-U loyalty members increased 1M QoQ to 31M. As a reminder, these households spend $1.8K per year, which is 4 times what a non-member spends. On average, a U.S. household spends $9.3K (based on Bureau of Economic Analysis PCE data from 2021); thus, Albertson’s still has a lot of market share capture ahead of it. As a reminder, the company’s pinnacle strategy is Customers for Life, which is based on placing the customer at the center of everything it does, with the goal of interacting with customers daily – not only to shop, but to consume relevant content about food, plan meals or find information to inspire their well-being – as well as meeting the customer’s preferences. For example, express delivery (under 2 hours) is now available to 74% of Albertsons households and penetration of this option increased five-fold. CEO Vivek Sankaran shared, "Everything we're doing on the app to enable meals, to provide more meals, is also working for us. If you go to our app, we just launched a meal capability where you can pick your meal and it populates the items that you want, and we're seeing a lot of traction and things like that."
- Market share was up in food and households grew. According to the company, "We are gaining market share in units. People are eating more at home, if they're in fact trading out of food away from home, trading into food at home, and they're eating more at home, the Fresh portfolio really, really matters."
- Sankaran also added, "I think our sector and we, in particular, we are doing really well relative to where we were pre-pandemic and the initiatives that we have in place have accelerated, so many different things we're doing. They're gaining customers, we're keeping them. Our portfolio is working with better execution."
- Like Walmart and Kroger, Albertsons is seeing some consumer trade down both in center-store and the perimeter. Sankaran noted that Albertsons, "tonnage is better than our units because it's sort of because a bag of avocados is 1 unit, right? Instead of 3 avocados that they have bought in the past." (In our opinion, it is likely that basket size is increasing as the consumer works to reduce miles driven, consolidating trips and cutting out stops).
- Trailing-twelve-month (TTM) sales (excluding fuel) per square foot was $608, up from $600 last quarter, and it is highly likely to grow by mid-single-digits by this time next year.
- TTM EBITDA/free cash flow (FCF) of $4.3B/$1.7B represented an increase of $3.5B/$1.1B at this point last year, and it is highly likely to be up by a similar amount by next year.
- Profitability declined due to investments in its omnichannel capabilities, higher wages, and as it cycled last year’s margins that were boosted by vaccine administrations. COO Sharon McCollam shared that, "we are seeing the highest labor productivity (tonnage per labor hour) that we have experienced in the history of the company." Sankaran noted, "We're putting a lot more technology into our promotions. It's a lot more personalized. That's a gross margin tailwind."
