Key Takeaways:
Albertsons Cos. cut its full-year comparable sales forecast to a decline of as much as 1.5%, citing cautious spending among lower-income households.
The company now expects comparable sales to fall between 1.5% and 0.5% for fiscal 2026, down from its prior forecast of flat to 1% growth, management said in a statement Thursday. The revision reflects a broader pullback among budget-conscious consumers facing higher living costs, a trend that has also weighed on rivals such as Kroger Co. and Walmart Inc.
For the 16 weeks ended June 20, the grocery chain reported net sales of $24.94 billion, up 0.2% from a year earlier. Growth in fuel, pharmacy and digital channels helped offset weaker grocery demand. Net income came in at about $85 million, or 17 cents a share, while adjusted net income reached just over $210 million, or 42 cents a share. The company did not disclose consensus estimates for the quarter.
The guidance cut comes as lower-income shoppers shift purchasing patterns, trading down to private-label brands and reducing discretionary grocery items. Albertsons has leaned on its digital platform and pharmacy services to retain traffic, but the core grocery business faces pressure from discount retailers and warehouse clubs such as Costco Wholesale Corp., which have gained share among price-sensitive consumers.
Albertsons shares fell 14.4% on the news, according to market data. The decline pushed the stock to its lowest level since the company's prior earnings report. The selloff reflects investor concern that the consumer weakness may persist through the remainder of the fiscal year, particularly if food inflation remains elevated relative to pre-2022 levels.
The guidance revision is one of the first major indications from a US grocery chain that the consumer slowdown is broadening beyond discretionary retail. Albertsons operates more than 2,200 stores across 34 states and banners including Safeway, Vons and Jewel-Osco, giving its outlook weight as a barometer for middle- and lower-income household spending.
Digital sales growth has been a bright spot for Albertsons, with the company investing in online ordering, delivery partnerships and loyalty program enhancements to compete with Amazon.com Inc.'s Whole Foods and Walmart's grocery pickup services. Pharmacy revenue has also provided a steady counterweight, benefiting from prescription volume growth and immunization services.
The company's next catalyst will be its fiscal second-quarter results, due later this year, when investors will assess whether the pullback has deepened or stabilized. Grocers across the industry are navigating a more cautious consumer environment as pandemic-era savings dwindle and food prices stay above pre-2022 levels. For Albertsons, the key question is whether its digital and pharmacy investments can continue to offset softer grocery sales in an environment where lower-income consumers are cutting back.
This article is for informational purposes only and does not constitute investment advice.
