Dive Brief:

• Albertsons posted $18.3 billion in net sales and other revenue during its second quarter of fiscal 2023, a 2.1% year-over-year increase, the supermarket company reported Tuesday.
• Same-store sales were up 2.9% during the period compared with the same quarter last year, while net income fell 22.1%, to $267 million.
• Albertsons has seen its sales and profitability fall off significantly in recent quarters in the face of deteriorating economic conditions for the grocery industry.

Dive Insight:

Albertsons’ financial performance has taken a hit over the past year as the grocer has dealt with an array of headwinds including slower food inflation, declining government assistance, higher interest rates and reduced sales related to the COVID-19 pandemic.

The company’s adjusted EBITDA — a key measure of profitability that analysts watch carefully when gauging the performance of grocery companies — decreased in Q2 on a year-over-year basis for the third quarter in a row. For Q2, Albertsons’ EBITDA slipped below $1 billion, landing at $976.9 million, or 5.3% of net sales. Albertsons attributed the decline primarily to a decrease in the gross margin combination from fuel sales and a reduction in COVID-19 vaccinations.

Albertsons also recorded lower same-store sales for the third straight quarter. That figure fell in Q2 to less than 3% from 4.9% in Q1, 5.6% in Q4 of 2022 and 7.9% during 2022’s third quarter. 

The company said strong pharmacy sales, a 19% rise in digital sales and inflation helped its performance during its most recent quarter.

While Albertsons’ sales growth has remained positive, that metric has also lost steam for multiple successive quarters.

“As we look ahead to the balance of the year, our focus remains the same – advancing operational excellence in our stores, driving growth in our digital and pharmacy operations, and deepening our relationships with our customers,” CEO Vivek Sankaran said in a statement about the grocer’s latest results.

The company did not hold an earnings call or provide financial guidance due to its pending merger with Kroger. The company announced Tuesday that it would distribute a cash dividend of 12 cents per share of common stock to shareholders on Nov. 14.

Albertsons released details about its performance during Q2 on the same day as the U.S. Census Bureau published estimated data showing that sales at grocery stores rose 1.6% year over year in September. By contrast, the retail sector as a whole posted sales that were up an estimated 3.8% last month compared with September 2022, the government said.