Grocery store chain stocks Albertsons (ACI) -7.44%)) It fell 8% on Tuesday as of 1pm ET. The Albertsons reported revenue today, and although results for the past quarter were solid, the prospects for progress on management’s profits were well below analyst expectations.
Albertsons’ shares were actually increasing annually, even if they were based on tariff concerns and economic uncertainties. So it was probably going to be a pullback. Additionally, the CEO of the Albertsons is about to retire. This could have played a role in conservative guidance.
Albertsons’ revenues are on the line, and revenues are rising
In the fourth quarter, the Albertsons revenue rose 2.5% to $18.8 billion, with sales at the same store increasing by 2.3%. Adjusted (non-GAAP or non-general accepted accounting principles) Earnings per share (EPS) fell 15% to $0.46. But that actually came before the $0.41 analyst’s expectations.
Although the fourth quarter EPS was a little ahead of expectations, management’s full-year 2025 EPS guidance was well below expectations of $2.28, which disappointed the guidance between $2.03 and $2.16 per share. What’s even more troubling was that the outlook marks the Albertsons’ adjusted revenue decline for the third year in a row.
Albertsons’ pharmacy offerings stood out by driving revenue growth while investing in delivery and digital programs, which increased 24% in the last quarter. However, pharmacies’ revenues were lower and delivery growth was accompanied by further investments on the part of the company. These two factors have kept Albertsons gross profits under pressure and kept grocery chains lid on price increases to stop competition.
But are management intentionally conservative?
It should be noted that Albertsons CEO Vivek Sankaran retired on May 1st, when current COO Susan Morris takes over. In many cases, if there is an expected management change, the company will lead conservatively to allow new executives to “beat” expectations early in their tenure. Given the unfortunate existing revenue trajectory, it is difficult to know if management is actually conservative, but that is a possibility.
Overall, the Albertsons may be stocks they own for defensive purposes in the recession, as people still need to eat and probably buy more groceries instead of going out to restaurants. However, the Albertsons are still in a tough, competitive location after the acquisition was proposed. Croger It was rejected last year. Therefore, those looking for strong revenue growth or surprising surprises should probably look elsewhere.
