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Albertsons (ACI) Q3 Earnings Beat, Identical Sales Up 7.9%
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Albertsons Companies, Inc. (ACI - Free Report) reported third-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 Own Brands and Fresh offerings, efficient in-store services, digital enhancement and operational capabilities drove the quarterly results.
This food and drug retailer recently 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.
Third-Quarter Performance in Detail
Albertsons Companies posted adjusted quarterly earnings of 87 cents a share, which comfortably surpassed the Zacks Consensus Estimate of 67 cents. The bottom line improved from the 79 cents reported in the prior-year period.
Net sales and other revenues came in at $18,154.9 million, up 8.5% year over year. The top line beat the Zacks Consensus Estimate of $17,554 million. The upside was driven by a 7.9% rise in identical sales and higher fuel sales, with retail price inflation contributing to the identical sales increase. Digital sales rose 33% year over year in the quarter.
The gross profit amounted to $5,121.7 million, up 6% year over year. However, the gross margin contracted 70 basis points to 28.2%.
Excluding the impact of fuel and LIFO expenses, the gross margin rate shrunk 47 basis points compared with the last year. This stemmed from higher product, shrink and supply-chain costs and a decline in pandemic-related revenues. These were partly offset by increased COVID-19 at-home test kit revenues and the benefits of ongoing productivity initiatives.
Selling and administrative expenses rose 6.8% to $4,532 million. As a percentage of net sales and other revenues, selling and administrative expenses decreased 40 basis points to 25%.
Excluding the impact of fuel, selling and administrative expenses, as a percentage of net sales and other revenues, shriveled 29 basis points. This decline can be attributed to the benefits of ongoing productivity initiatives and sales leverage, partly offset by market-driven wage rate increases, investments related to the acceleration of digital and omnichannel capabilities and merger-related costs.
Adjusted EBITDA increased 10.2% to $1,158 million. Meanwhile, the adjusted EBITDA margin increased 10 basis points to 6.4% on a year-over-year basis.
Albertsons Companies, Inc. Price, Consensus and EPS Surprise
Albertsons Companies, which carries a Zacks Rank #2 (Buy), ended the quarter with cash and cash equivalents of $4,412.3 million as of Dec 3, 2022. The long-term debt and finance lease obligations totaled $7,091.7 million, while total stockholders' equity amounted to $819 million.
Shares of Albertsons Companies have declined 19.6% in the past six months compared with the industry's fall of 6..8%.
Other Stocks Looking Red Hot
Here we have highlighted two other top-ranked stocks, namely Build-A-Bear Workshop (BBW - Free Report) and Capri Holdings (CPRI - Free Report) .
The Zacks Consensus Estimate for Build-A-Bear Workshop’s current financial-year revenues and EPS suggests growth of 11.9% and 21.5%, respectively, from the year-ago reported figures. Build-A-Bear Workshop has a trailing four-quarter earnings surprise of 14.7%, on average.
Capri Holdings, a global fashion luxury group, carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 11.8%.
The Zacks Consensus Estimate for Capri Holdings’ current financial-year revenues and EPS suggests growth of 1% and 10.6%, respectively, from the year-ago reported figures. Capri Holdings has a trailing four-quarter earnings surprise of 21%, on average.
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Albertsons (ACI) Q3 Earnings Beat, Identical Sales Up 7.9%
Albertsons Companies, Inc. (ACI - Free Report) reported third-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 Own Brands and Fresh offerings, efficient in-store services, digital enhancement and operational capabilities drove the quarterly results.
This food and drug retailer recently 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.
Third-Quarter Performance in Detail
Albertsons Companies posted adjusted quarterly earnings of 87 cents a share, which comfortably surpassed the Zacks Consensus Estimate of 67 cents. The bottom line improved from the 79 cents reported in the prior-year period.
Net sales and other revenues came in at $18,154.9 million, up 8.5% year over year. The top line beat the Zacks Consensus Estimate of $17,554 million. The upside was driven by a 7.9% rise in identical sales and higher fuel sales, with retail price inflation contributing to the identical sales increase. Digital sales rose 33% year over year in the quarter.
The gross profit amounted to $5,121.7 million, up 6% year over year. However, the gross margin contracted 70 basis points to 28.2%.
Excluding the impact of fuel and LIFO expenses, the gross margin rate shrunk 47 basis points compared with the last year. This stemmed from higher product, shrink and supply-chain costs and a decline in pandemic-related revenues. These were partly offset by increased COVID-19 at-home test kit revenues and the benefits of ongoing productivity initiatives.
Selling and administrative expenses rose 6.8% to $4,532 million. As a percentage of net sales and other revenues, selling and administrative expenses decreased 40 basis points to 25%.
Excluding the impact of fuel, selling and administrative expenses, as a percentage of net sales and other revenues, shriveled 29 basis points. This decline can be attributed to the benefits of ongoing productivity initiatives and sales leverage, partly offset by market-driven wage rate increases, investments related to the acceleration of digital and omnichannel capabilities and merger-related costs.
Adjusted EBITDA increased 10.2% to $1,158 million. Meanwhile, the adjusted EBITDA margin increased 10 basis points to 6.4% on a year-over-year basis.
Albertsons Companies, Inc. Price, Consensus and EPS Surprise
Albertsons Companies, Inc. price-consensus-eps-surprise-chart | Albertsons Companies, Inc. Quote
Other Financial Details
Albertsons Companies, which carries a Zacks Rank #2 (Buy), ended the quarter with cash and cash equivalents of $4,412.3 million as of Dec 3, 2022. The long-term debt and finance lease obligations totaled $7,091.7 million, while total stockholders' equity amounted to $819 million.
Shares of Albertsons Companies have declined 19.6% in the past six months compared with the industry's fall of 6..8%.
Other Stocks Looking Red Hot
Here we have highlighted two other top-ranked stocks, namely Build-A-Bear Workshop (BBW - Free Report) and Capri Holdings (CPRI - Free Report) .
Build-A-Bear Workshop, which operates as a multi-channel retailer of plush animals and related products, sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Build-A-Bear Workshop’s current financial-year revenues and EPS suggests growth of 11.9% and 21.5%, respectively, from the year-ago reported figures. Build-A-Bear Workshop has a trailing four-quarter earnings surprise of 14.7%, on average.
Capri Holdings, a global fashion luxury group, carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 11.8%.
The Zacks Consensus Estimate for Capri Holdings’ current financial-year revenues and EPS suggests growth of 1% and 10.6%, respectively, from the year-ago reported figures. Capri Holdings has a trailing four-quarter earnings surprise of 21%, on average.