Dive Brief:
- Albertsons saw net sales and other revenue increase by just under 2% during the third quarter of fiscal 2025, to about $19.1 billion, driven primarily by strong growth in pharmacy sales, the supermarket operator announced Wednesday.
- Identical sales were up by 2.4%, an amount that was depressed by between 10 and 20 basis points by the delay in the distribution of SNAP benefits caused by the federal government shutdown last autumn.
- Shoppers showed growing signs of price sensitivity during the quarter, with even higher-income shoppers paying more attention to costs, CEO Susan Morris said during a Wednesday morning earnings call.
Dive Insight:
The shaky economic conditions that defined Albertsons’ latest quarter affected shopping behavior across the income spectrum, with customers who earn less buying fewer items per trip, prioritizing essentials and making more frequent visits to stores, Morris said. Middle-income households, which Morris said had been “relatively resilient,” traded down in some categories as their spending capacity took a hit, while spending patterns among more affluent customers remained stable even as these shoppers became more conscious of price and value, she said.
In response, Albertsons stepped up personalized promotions and loyalty program enhancements during Q3 while also turning to “surgical management of cost inflation,” Morris said. The retailer continued to invest in its private label portfolio and is on course to increase its own brands penetration from 25% to 30%, she said.
“We also very carefully manage the pass through inflation to deliver value for customers across the entire company, ensuring affordability while protecting margins,” Morris said. The grocer leaned into artificial intelligence systems as it sought to deliver relief to shoppers while also charting its future course, she added.
Albertsons is also looking to digital relationships with shoppers to drive sales, Morris said, noting that the “Ask AI” search tool the company introduced in 2025 drove a 10% increase in basket size among people who use the capability.
“By leveraging AI, we’re creating differentiated experiences that go beyond convenience. They increase basket size, drive repeat trips and deepen loyalty,” Morris said.
Albertsons’ online sales rose 21% during Q3, while digital penetration reached about 9.5%, she said. Albertsons believes that its e-commerce business could become profitable as soon as the end of this year, President and CFO Sharon McCollam said during the call, adding that the company does not include retail media sales when calculating its digital profitability.
McCollam said Albertsons expects to face significant headwinds during the coming months stemming from Medicare drug price reductions related to the federal Inflation Reduction Act, the first round of which went into effect at the start of 2026. The company forecasts that the changes will depress identical sales during Q4 by about two-thirds of a percentage point and shave as many as 18 basis points off that metric for the full fiscal year, she said.
Albertsons has narrowed its guidance for fiscal 2025 as a result of the challenges posed by the government’s moves to reduce drug prices for consumers. The company now expects identical sales growth for the year to come in between 2.2% to 2.5%, down from its previously forecast range of 2.2% to 2.75%.
Morris said during Wednesday’s call that investors undervalue Albertsons, a point she also made when the company announced its second-quarter results in October 2025. Since then, however, the retailer’s closing stock price has declined more than 10%, and its shares were down further on Wednesday morning.
