Dive Brief:
- Albertsons recorded identical sales growth of just under 1% during the fourth quarter of fiscal 2025, down from a 2.3% increase during the same period a year ago, the grocer announced Tuesday.
- The grocery chain logged a net loss of about $480 million during the quarter, an amount that reflects a $600 million charge related to a settlement framework it has reached to resolve opioid-related claims it has been facing. Albertsons’ quarterly net sales rose year over year by nearly 8%, to $20.3 billion, although most of that increase was driven by incremental sales connected with the extra week in the quarter.
- Albertsons’ sales growth in Q4 was held back in part by the federal Inflation Reduction Act, which had a greater impact on the company’s pharmacy sales than it had anticipated, President and CFO Sharon McCollam said during a Tuesday morning earnings call.
Dive Insight:
The hit Albertsons absorbed from the Inflation Reduction Act — which has put pressure on the revenue retailers generate through Medicare — underscores the significant role pharmacy sales play in driving the grocer’s results. Albertsons still managed to post increased profitability in its pharmacy business and also continued to see its prescription count increase, CEO Susan Morris said during the call.
The retailer also ran into headwinds due to the rapid reduction in egg prices over the past year, and the company expects that trend to continue during the first quarter of fiscal 2026, McCollam said.
Morris noted that Albertsons has sought to hold back price increases for shoppers and has not passed on the approximately 2% inflation in food prices that it has encountered. The company has also focused on market-by-market price adjustments to improve its competitiveness and is funding those investments through “productivity funding, not through margin erosion,” Morris said.
“[O]ur price position is very different across the country, depending where we’re at, and so that’s a very surgical approach that we take because of that, where we can massage promotional in one area, working on frontline pricing in another,” she said.
Albertsons’ agreement to settle “substantially all” of the opioid-related claims it has faced from state, local and tribal governments, which it announced Tuesday, was a key factor in the net loss it recorded during Q4. Under that arrangement, Albertsons is set to pay $774 million over nine years but has not admitted liability or wrongdoing, McCollam said.
Albertsons is focused on improving its financial performance as it looks ahead to fiscal 2026, McCollam said.
“As we look ahead to 2026, we view the year as an important step in returning the business to earnings growth while continuing to invest in the capabilities that support sustainable, long-term value creation,” she said.
Albertsons recorded brisk digital sales during the quarter, as e-commerce sales rose 16% compared with Q4 of fiscal 2024. In addition, digital penetration came in above 10% during the quarter for the first time, Morris said. The company’s 30-minute delivery service was the fastest-growing component of its digital operations, she added.
For all of fiscal 2025, Albertsons recorded net sales of nearly $83.2 billion, up about 3% from the prior year. The company’s identical sales increased 2% over the year, while net income came in at $217 million and digital sales were up 21%.
Albertsons said it expects identical sales growth for fiscal 2026 to fall in a range of between 0% and 1%, which it said reflects an estimated 150-basis-point headwind related to the Inflation Reduction Act.
Albertsons also said Tuesday that it has raised its dividend for common stockholders by 13%, to a new annualized rate of 68 cents per share.
