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Albertsons Companies, Inc. (ACI - Free Report) reported first-quarter fiscal 2023 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. While the top line improved from the year-ago period, the bottom line declined.
Albertsons’ focus on providing efficient in-store services, enhancing digital and omni-channel capabilities, and increasing productivity has contributed to its upbeat performance.
Q1 Performance in Detail
Albertsons, which entered an “Agreement and Plan of Merger” with Kroger (KR - Free Report) on October 13, 2022, posted adjusted quarterly earnings of 93 cents a share, which comfortably surpassed the Zacks Consensus Estimate of 81 cents. However, the bottom line declined from the 95 cents reported in the prior-year period.
Net sales and other revenues were $24,050.2 million, up 3.2% year over year. The top line beat the Zacks Consensus Estimate of $23,886 million. The upside was driven by a 4.9% rise in identical sales, with retail price inflation, growth in pharmacy and increasing digital penetration contributing to the metric. The top-line increase was partly offset by lower fuel sales. Impressively, digital sales rose 22% year over year in the quarter.
Albertsons Companies, Inc. Price, Consensus and EPS Surprise
The gross profit amounted to $6,662.7 million, up 1.8% year over year. However, the gross margin contracted 40 basis points to 27.7%. We expected a year-over-year decline of 30 basis points in the gross margin for the quarter under review.
Excluding the impacts of fuel and LIFO expenses, the gross margin rate decreased 91 basis points from the first quarter of fiscal 2022. Almost half of the rate decline can be attributed to pharmacy operations, while the remaining dip resulted from increases in shrink, picking and delivery costs associated with continued growth in digital sales, and warehouse expenses.
Selling and administrative expenses rose 2.5% to $6,012.9 million. As a percentage of net sales and other revenues, selling and administrative expenses decreased 20 basis points to 25%. Excluding the impacts of fuel, selling and administrative expenses, as a percentage of net sales and other revenues, decreased 53 basis points. We anticipated a year-over-year increase of 1.6% in selling and administrative expenses.
Adjusted EBITDA decreased 7.2% to $1,318.5 million. Meanwhile, the adjusted EBITDA margin contracted 60 basis points to 5.5% on a year-over-year basis. The decline in adjusted EBITDA can be attributed to fewer COVID-19 vaccines in the quarter. We had expected a 100-basis-point decline in the adjusted EBITDA margin.
Management expects the declining trend in COVID-19 vaccinations to continue in fiscal 2023. This is in addition to a drop in COVID-19 at-home test kit revenues. As a result, the company foresees $130 million of headwinds related to adjusted EBITDA for the remaining three quarters of fiscal 2023.
Other Financial Details
Albertsons, which carries a Zacks Rank #3 (Hold) at present, ended the quarter with cash and cash equivalents of $225.2 million as of Jun 17, 2023. The company’s long-term debt and finance lease obligations totaled $7,825 million, while total stockholders' equity amounted to $2,000 million.
Shares of Albertsons have gained 3.4% in the past three months against the industry's fall of 6.8%.
2 Red-Hot Stocks
Here we have highlighted two better-ranked stocks, namely Celsius Holdings (CELH - Free Report) and Church & Dwight (CHD - Free Report) .
The Zacks Consensus Estimate for Celsius Holdings’ current fiscal-year sales and earnings suggests growth of 69.6% and 154.4%, respectively, from the year-ago reported numbers.
Church & Dwight, which develops, manufactures and markets a broad range of household, personal care and specialty products, currently has a Zacks Rank #2. CHD’s expected EPS growth rate for three to five years is 7.9%.
The Zacks Consensus Estimate for Church & Dwight’s current fiscal-year sales and earnings suggests growth of 7.3% and 4.7%, respectively, from the year-ago reported numbers. CHD has a trailing four-quarter earnings surprise of 9.8%, on average.
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Albertsons (ACI) Q1 Earnings Beat Estimates, Sales Rise Y/Y
Albertsons Companies, Inc. (ACI - Free Report) reported first-quarter fiscal 2023 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. While the top line improved from the year-ago period, the bottom line declined.
Albertsons’ focus on providing efficient in-store services, enhancing digital and omni-channel capabilities, and increasing productivity has contributed to its upbeat performance.
Q1 Performance in Detail
Albertsons, which entered an “Agreement and Plan of Merger” with Kroger (KR - Free Report) on October 13, 2022, posted adjusted quarterly earnings of 93 cents a share, which comfortably surpassed the Zacks Consensus Estimate of 81 cents. However, the bottom line declined from the 95 cents reported in the prior-year period.
Net sales and other revenues were $24,050.2 million, up 3.2% year over year. The top line beat the Zacks Consensus Estimate of $23,886 million. The upside was driven by a 4.9% rise in identical sales, with retail price inflation, growth in pharmacy and increasing digital penetration contributing to the metric. The top-line increase was partly offset by lower fuel sales. Impressively, digital sales rose 22% year over year in the quarter.
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 $6,662.7 million, up 1.8% year over year. However, the gross margin contracted 40 basis points to 27.7%. We expected a year-over-year decline of 30 basis points in the gross margin for the quarter under review.
Excluding the impacts of fuel and LIFO expenses, the gross margin rate decreased 91 basis points from the first quarter of fiscal 2022. Almost half of the rate decline can be attributed to pharmacy operations, while the remaining dip resulted from increases in shrink, picking and delivery costs associated with continued growth in digital sales, and warehouse expenses.
Selling and administrative expenses rose 2.5% to $6,012.9 million. As a percentage of net sales and other revenues, selling and administrative expenses decreased 20 basis points to 25%. Excluding the impacts of fuel, selling and administrative expenses, as a percentage of net sales and other revenues, decreased 53 basis points. We anticipated a year-over-year increase of 1.6% in selling and administrative expenses.
Adjusted EBITDA decreased 7.2% to $1,318.5 million. Meanwhile, the adjusted EBITDA margin contracted 60 basis points to 5.5% on a year-over-year basis. The decline in adjusted EBITDA can be attributed to fewer COVID-19 vaccines in the quarter. We had expected a 100-basis-point decline in the adjusted EBITDA margin.
Management expects the declining trend in COVID-19 vaccinations to continue in fiscal 2023. This is in addition to a drop in COVID-19 at-home test kit revenues. As a result, the company foresees $130 million of headwinds related to adjusted EBITDA for the remaining three quarters of fiscal 2023.
Other Financial Details
Albertsons, which carries a Zacks Rank #3 (Hold) at present, ended the quarter with cash and cash equivalents of $225.2 million as of Jun 17, 2023. The company’s long-term debt and finance lease obligations totaled $7,825 million, while total stockholders' equity amounted to $2,000 million.
Shares of Albertsons have gained 3.4% in the past three months against the industry's fall of 6.8%.
2 Red-Hot Stocks
Here we have highlighted two better-ranked stocks, namely Celsius Holdings (CELH - Free Report) and Church & Dwight (CHD - Free Report) .
Celsius Holdings, which offers functional drinks and liquid supplements, currently carries a Zacks Rank #2 (Buy). CELH delivered an earnings surprise of 81.8% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Celsius Holdings’ current fiscal-year sales and earnings suggests growth of 69.6% and 154.4%, respectively, from the year-ago reported numbers.
Church & Dwight, which develops, manufactures and markets a broad range of household, personal care and specialty products, currently has a Zacks Rank #2. CHD’s expected EPS growth rate for three to five years is 7.9%.
The Zacks Consensus Estimate for Church & Dwight’s current fiscal-year sales and earnings suggests growth of 7.3% and 4.7%, respectively, from the year-ago reported numbers. CHD has a trailing four-quarter earnings surprise of 9.8%, on average.