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Albertsons (ACI) Q2 Earnings Top Estimates, Identical Sales Up
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Albertsons Companies, Inc. (ACI - Free Report) reported second-quarter fiscal 2022 results, wherein the top and bottom lines not only beat the Zacks Consensus Estimate but also improved year over year. The company's focus on providing efficient in-store services, enhancing digital and omnichannel capabilities and efforts to bolster productivity drove the quarterly results.
Recently, this food and drug retailer entered into an “Agreement and Plan of Merger” with The Kroger Co. (KR - Free Report) .
Kroger will acquire all the outstanding shares of Albertsons Companies for an estimated total consideration of $34.10 per share. The combined entity will benefit from a loyal customer base, digital investments, increased purchasing power and a broader product portfolio.
As part of the transaction, Albertsons Companies will pay a special cash dividend of up to $4 billion to its shareholders. The dividend will be paid out on Nov 7, 2022 to shareholders of record as of the close of the business on Oct 24, 2022.
Second-Quarter Performance in Detail
Albertsons Companies posted adjusted quarterly earnings of 72 cents a share, which comfortably surpassed the Zacks Consensus Estimate of 64 cents and our estimate of 63 cents. The bottom line improved 12.5% from the prior-year period.
Net sales and other revenues came in at $17,919.4 million, up 8.6% year over year. The top line beat the Zacks Consensus Estimate of $17,651 million and our estimate of $17,600.5 million. The upside was driven by a 7.4% rise in identical sales and higher fuel sales, with retail price inflation contributing to the identical sales increase. Digital sales surged 36% year over year in the quarter. We expected identical sales to be 5.2% during the quarter under discussion.
Albertsons Companies, Inc. Price, Consensus and EPS Surprise
The gross profit amounted to $5,004.6 million, up 6.1% year over year. However, the gross margin contracted 70 basis points to 27.9%. Excluding the impact of fuel and LIFO expenses, the gross margin rate shrunk 43 basis points compared with the last year. This stemmed from higher product and supply-chain expenses, increases in picking and delivery costs related to growth in digital sales and fewer COVID-19 vaccines. These were partly offset by the benefits of ongoing productivity initiatives.
Selling and administrative expenses rose 6.1% to $4,487.6 million. As a percentage of net sales and other revenues, selling and administrative expenses decreased 60 basis points to 25%.
Excluding the impact of fuel, selling and administrative expenses as a percentage of net sales and other revenues shriveled 31 basis points. This decline was due to lower pandemic-related expenses, the execution of productivity initiatives as well as sales leverage. These were partly offset by investments related to the acceleration of digital and omnichannel capabilities, market-driven wage rate increases, and higher depreciation and amortization.
Adjusted EBITDA increased 8.6% to $1,048.5 million, while the adjusted EBITDA margin increased 10 basis points to 5.9% on a year-over-year basis.
Other Financial Details
Albertsons Companies, which carries a Zacks Rank #2 (Buy), ended the quarter with cash and cash equivalents of $3,392.4 million as of Sep 10, 2022. The long-term debt and finance lease obligations totaled $7,106.8 million, while total stockholders' equity amounted to $4,387 million.
Shares of Albertsons Companies have declined 7.5% in the past year compared with the industry's decline of 39.7%.
Other Stocks Looking Red Hot
Here we have highlighted two other top-ranked stocks, namely Ulta Beauty (ULTA - Free Report) and Arhaus (ARHS - Free Report) .
Ulta Beauty, which operates as a retailer of beauty products, sports a Zacks Rank #1 (Strong Buy). Ulta Beauty has a trailing four-quarter earnings surprise of 32.8%, on average. ULTA has an expected EPS growth rate of 13.9% for three to five years. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Ulta Beauty’s current financial-year sales suggests growth of 13.7% from the year-ago reported number.
Arhaus, which operates as a lifestyle brand and a premium retailer, currently carries a Zacks Rank #2. ARHS has an expected EPS growth rate of 14.3% for three to five years.
The Zacks Consensus Estimate for Arhaus’ current financial-year revenues and EPS suggests growth of 49.2% and 5.8%, respectively, from the year-ago reported figures. ARHS has a trailing four-quarter earnings surprise of 92%, on average.
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Albertsons (ACI) Q2 Earnings Top Estimates, Identical Sales Up
Albertsons Companies, Inc. (ACI - Free Report) reported second-quarter fiscal 2022 results, wherein the top and bottom lines not only beat the Zacks Consensus Estimate but also improved year over year. The company's focus on providing efficient in-store services, enhancing digital and omnichannel capabilities and efforts to bolster productivity drove the quarterly results.
Recently, this food and drug retailer entered into an “Agreement and Plan of Merger” with The Kroger Co. (KR - Free Report) .
Kroger will acquire all the outstanding shares of Albertsons Companies for an estimated total consideration of $34.10 per share. The combined entity will benefit from a loyal customer base, digital investments, increased purchasing power and a broader product portfolio.
As part of the transaction, Albertsons Companies will pay a special cash dividend of up to $4 billion to its shareholders. The dividend will be paid out on Nov 7, 2022 to shareholders of record as of the close of the business on Oct 24, 2022.
Second-Quarter Performance in Detail
Albertsons Companies posted adjusted quarterly earnings of 72 cents a share, which comfortably surpassed the Zacks Consensus Estimate of 64 cents and our estimate of 63 cents. The bottom line improved 12.5% from the prior-year period.
Net sales and other revenues came in at $17,919.4 million, up 8.6% year over year. The top line beat the Zacks Consensus Estimate of $17,651 million and our estimate of $17,600.5 million. The upside was driven by a 7.4% rise in identical sales and higher fuel sales, with retail price inflation contributing to the identical sales increase. Digital sales surged 36% year over year in the quarter. We expected identical sales to be 5.2% during the quarter under discussion.
Albertsons Companies, Inc. Price, Consensus and EPS Surprise
Albertsons Companies, Inc. price-consensus-eps-surprise-chart | Albertsons Companies, Inc. Quote
The gross profit amounted to $5,004.6 million, up 6.1% year over year. However, the gross margin contracted 70 basis points to 27.9%. Excluding the impact of fuel and LIFO expenses, the gross margin rate shrunk 43 basis points compared with the last year. This stemmed from higher product and supply-chain expenses, increases in picking and delivery costs related to growth in digital sales and fewer COVID-19 vaccines. These were partly offset by the benefits of ongoing productivity initiatives.
Selling and administrative expenses rose 6.1% to $4,487.6 million. As a percentage of net sales and other revenues, selling and administrative expenses decreased 60 basis points to 25%.
Excluding the impact of fuel, selling and administrative expenses as a percentage of net sales and other revenues shriveled 31 basis points. This decline was due to lower pandemic-related expenses, the execution of productivity initiatives as well as sales leverage. These were partly offset by investments related to the acceleration of digital and omnichannel capabilities, market-driven wage rate increases, and higher depreciation and amortization.
Adjusted EBITDA increased 8.6% to $1,048.5 million, while the adjusted EBITDA margin increased 10 basis points to 5.9% on a year-over-year basis.
Other Financial Details
Albertsons Companies, which carries a Zacks Rank #2 (Buy), ended the quarter with cash and cash equivalents of $3,392.4 million as of Sep 10, 2022. The long-term debt and finance lease obligations totaled $7,106.8 million, while total stockholders' equity amounted to $4,387 million.
Shares of Albertsons Companies have declined 7.5% in the past year compared with the industry's decline of 39.7%.
Other Stocks Looking Red Hot
Here we have highlighted two other top-ranked stocks, namely Ulta Beauty (ULTA - Free Report) and Arhaus (ARHS - Free Report) .
Ulta Beauty, which operates as a retailer of beauty products, sports a Zacks Rank #1 (Strong Buy). Ulta Beauty has a trailing four-quarter earnings surprise of 32.8%, on average. ULTA has an expected EPS growth rate of 13.9% for three to five years. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Ulta Beauty’s current financial-year sales suggests growth of 13.7% from the year-ago reported number.
Arhaus, which operates as a lifestyle brand and a premium retailer, currently carries a Zacks Rank #2. ARHS has an expected EPS growth rate of 14.3% for three to five years.
The Zacks Consensus Estimate for Arhaus’ current financial-year revenues and EPS suggests growth of 49.2% and 5.8%, respectively, from the year-ago reported figures. ARHS has a trailing four-quarter earnings surprise of 92%, on average.