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Albertsons: Still Hitting Home Runs Despite Pending Merger

Thomas Paulson
Jan 13, 2023
Albertsons: Still Hitting Home Runs Despite Pending Merger

  • Albertsons' comparable-store sales increased +7.9% for the November-end quarter and loyalty members increased an impressive +1.2M QoQ to 33M (+16% YoY). Our data indicates that Jewel-Osco was the outperforming brand in the portfolio. The gap between comp-store-sales and traffic is explained by food-at-home inflation running at a +11.8% YoY rate as of December.
  • Albertsons' 2- and 3-year comp CAGRs improved, and the rate is at the high-end of the industry.
  • Trailing-twelve-month (TTM) sales per square foot increased $11 QoQ to $636 and are likely to near $690 in a year given ongoing inflation and market share capture.
  • TTM EBITDA and free cash flow increased to $4.7B / $846M and are likely to be $500M higher in a year.
  • The company did not provide an update on its proposed merger with Kroger in its quarterly SEC filings but did note that it had approved "up to $100 million for a retention program covering certain executives and other employees in order to ensure a successful and efficient integration process" related to the transactions. According to the company, 50% of the retention bonus would be paid at the close of the merger, and the other 50% six months later. The bonuses would be paid even if the merger is terminated.

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Thomas Paulson

Director of Research and Business Development, Placer.ai

Thomas Paulson spent 20 years as a Wall Street analyst and a member of asset management teams at AllianceBernstein and Cornerstone Capital, representing top-50 ownership positions including Target, Home Depot, Nike, Amazon, Google, and many more.

He brings consumer related expertise and knowledge of enterprises in retail, CPG, financial services, telecom, and entertainment.

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