Albertsons Q3 Results Led by Strong Private Brand

Albertsons Companies (Albertsons/Safeway) today reported results for the third quarter of fiscal 2019, which ended November 30, 2019.

Third Quarter of Fiscal 2019 Highlights included:

  • Private brand sales penetration reached a new high of 25.6%. Private brand penetration has increased from 23% in fiscal 2017 to 25.6% in the third quarter. The retailer introduced 1,100 new items in 2018.
  • Identical sales growth of 2.7%; marked the eighth consecutive quarter of identical sales growth
  • Net income of $55 million
  • Adjusted EBITDA of $634 million, slightly ahead of our expectations
  • Online home delivery and Drive Up and Go sales growth of 34%
  • Just for U registrations and digital coupon redemptions up 25% and 31%, respectively
Vivek Sankaran, President and Chief Executive Officer

“Our identical sales momentum continued in the third quarter, as our core business continues to deliver strong growth,” said Vivek Sankaran, President and Chief Executive Officer. “We are focused on providing our customers with an easy shopping experience, exciting merchandise and friendly customer service in our omni-channel shopping environment and creating deep and lasting customer relationships.”

“Our productivity and cost reduction initiatives are also beginning to take shape, which we intend to use to fund strategic growth investments, offset cost inflation and support earnings growth,” added Sankaran.

Sales and other revenue increased 1.9% to $14.1 billion during the 12 weeks ended November 30, 2019 (“third quarter of fiscal 2019”) compared to $13.8 billion during the 12 weeks ended December 1, 2018 (“third quarter of fiscal 2018”). The increase was driven by the Company’s 2.7% increase in identical sales, partially offset by a reduction in sales related to store closures since the third quarter of fiscal 2018 and lower fuel sales. Identical sales continued to benefit from our growth in online home delivery and Drive Up and Go sales and Own Brands sales growth.

Gross profit margin increased to 28.3% during the third quarter of fiscal 2019 compared to 27.8% during the third quarter of fiscal 2018. Excluding the impact of fuel, gross profit margin increased 40 basis points compared to the third quarter of fiscal 2018, primarily due to improved product mix, including increased private brand penetration and lower shrink expense, partially offset by higher rent expense related to sale-leaseback transactions.

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Christopher Durham is the president of My Private Brand and the co-founder of The Vertex Awards. He is a strategist, author, consultant and retailer who built brands at Delhaize-owned Food Lion, and lead strategy and brand development for Lowe’s Home Improvement. He has consulted with retailers around the world on their private brand portfolios including: Family Dollar, Petco, Staples, Office Depot, Best Buy, Metro (Canada), TLW (Taiwan) and Hola (Taiwan). Durham has published five definitive books on private brands, including his first book, Fifty2: The My Private Brand Project. In 2017, he will debut his newest book, Vanguard: Vintage Originals, a visual tour of innovation and disruption in private brand going back to the mid-1800’s. Dynamic in his presentation while down to earth and frank in his opinions, he has presented at numerous conferences, including FUSE, The Dieline Conference, Packaging that Sells, Omnishopper and PLMA’a annual trade show in Chicago. Durham lives in Charlotte, NC with his wife, Laraine, and two daughters, Olivia and Sarah.