Dive Brief:

• Albertsons recorded $18.6 billion in net sales and other revenue during its fiscal third quarter, up 2.2% compared with the same period in 2022, the grocer announced Tuesday.
• Identical sales moved ahead 2.9% year over year, while net income slipped 3.8%, to $361.4 million.
• Albertsons generated higher sales during Q3 than Wall Street analysts had expected, but the company continues to face challenges as it weathers rocky economic conditions.

Dive Insight:

While Albertsons CEO Vivek Sankaran characterized the company’s latest quarterly results as “solid,” he noted in a statement that the retailer is continuing to deal with a range of headwinds.

Those obstacles include declining inflation — a trend that has held back growth across the grocery industry in recent quarters. Reflecting that, Albertsons’ results were far less robust during Q3 than they were a year ago when the company saw sales rise 9% year over year and identical sales increase 7.9%.

Albertsons is also dealing with the cost of investments in wages and benefits for associates as well as the impact of reduced government assistance for shoppers despite many having to resume payments on debts like student loans that had been on hold, according to the company.

Albertsons did not hold an earnings call or issue financial guidance in light of the company’s planned merger with Kroger. The Federal Trade Commission is due to announce whether it will allow or attempt to block the transaction later this month.

The grocer said its digital sales rose 21% year over year during Q3, a figure that was up from 19% in the second quarter but below the 22% increase in online sales Albertsons posted during Q1.

Albertsons said strong pharmacy sales drove the increase in identical sales it recorded during Q3, but noted that its pharmacy operations also brought down its gross margin rate. The company added that its productivity initiatives helped it lower prices for some items during the quarter, which concluded Dec. 2, 2023.

Albertsons also said Tuesday that it would pay common stockholders a cash dividend of 12 cents per share on Feb. 9 — the same amount as its last quarterly dividend, which was distributed on Nov. 14, 2023. Albertsons has maintained that level since late 2021 with the exception of a $6.85-per-share special dividend it paid on Jan. 20, 2023. That round of payments, which cost Albertsons nearly $4 billion, drew sharp blowback and legal challenges from critics who said it would weaken the company financially ahead of its planned merger with Kroger.