Albertsons Boosts Sales, Sees Rapid Pace Continuing All Year

Albertsons Cos. shares rose after virus-wary Americans cooking at home led to another jump in sales growth and an optimistic forecast.

Identical-store sales, a key gauge of a retailer’s health, climbed 13.8% for the three months ended Sept. 12, the supermarket chain said Tuesday in a statement. The company said it sees that metric for the full fiscal year coming in at 15.5% or more.

It’s not panic buying or pantry loading that’s keeping sales elevated anymore, Chief Executive Officer Vivek Sankaran said in an interview. Instead, it’s “just a lot of steadiness.” He says consumers are coming in a little less often and buying much fuller baskets when they do.

“It’s clear that people are cooking a lot more home and spending a lot more time at home,” he said.

Out of Stock

Albertsons’ stock rose 7.4% to $15.45 at 9:30 a.m. in New York on Tuesday. The latest quarterly report is only Albertsons’ second since its lackluster public debut in June.

Supermarkets have largely benefited during the Covid-19 pandemic, as widespread economic shutdowns beginning in March led many Americans to avoid restaurants and eat more at home. Albertsons sees higher spending on groceries as an enduring trend, with the market holding on to its 2020 growth even after the pandemic fades.

Still, supermarkets have had some problems keeping items in stock: packaged meats like hot dogs and deli cuts, baking products like flour and cleaning supplies. Disinfecting wipes and sprays are nearly impossible to keep in stock.

“While it’s been eight months, the manufacturers, for them to ramp up supply, takes longer than eight months. It’s difficult for them to ramp up supply that quickly,” Sankaran said in the interview.

Tech Spending

Albertsons, whose banners include Safeway and Vons, has been lagging giants Kroger Co. and Walmart Inc. in its e-commerce strategy, but it has been investing to improve its online presence -- and that’s starting to pay off. It reported digital sales growth of 243% in the second quarter. The company is “in the early stages of a transformation to become a modern, growing food retailer,” the CEO said in a statement.

“We continue to think that Albertsons will benefit from accelerating restaurant closures and elevated levels of eating/cooking at home for the foreseeable future,” RBC Capital Markets analyst Beth Reed wrote in a note. It will also benefit from accelerated investments in e-commerce, she added, citing an about 20% rise in planned capex spending that could go toward technology.

In terms of tech, the supermarket operator has set up new screening kiosks in stores for employees to make sure they’re not coming to work sick. It’s also adding pickup lockers, where customers can grab goods they bought online with a code.

Sankaran also sees holiday shopping starting earlier this year than in the past -- with higher demand for Thanksgiving items. He said Albertsons is prepared in terms of inventory and labor.

©2020 Bloomberg L.P.

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