Albertsons Companies, Inc. Reports Third Quarter Results
Boise, ID - January 7, 2020
Albertsons Companies, Inc. (the "Company") today reported results for the third quarter of fiscal 2019, which ended November 30, 2019.
Third Quarter of Fiscal 2019 Highlights
Identical sales growth of 2.7%; marked the eighth consecutive quarter of identical sales growth
Net income of $55 million
Adjusted EBITDA of $634 million, slightly ahead of our expectations
Own Brands sales penetration reached a new high of 25.6%
Online home delivery and Drive Up and Go sales growth of 34%
Just for U registrations and digital coupon redemptions up 25% and 31%, respectively
"Our identical sales momentum continued in the third quarter, as our core business continues to deliver strong growth," said Vivek Sankaran, President and Chief Executive Officer. "We are focused on providing our customers with an easy shopping experience, exciting merchandise and friendly customer service in our omni-channel shopping environment, and creating deep and lasting customer relationships."
"Our productivity and cost reduction initiatives are also beginning to take shape, which we intend to use to fund strategic growth investments, offset cost inflation and support earnings growth," added Sankaran.
Third Quarter of Fiscal 2019 Results
Sales and other revenue increased 1.9% to $14.1 billion during the 12 weeks ended November 30, 2019 ("third quarter of fiscal 2019") compared to $13.8 billion during the 12 weeks ended December 1, 2018 ("third quarter of fiscal 2018"). The increase was driven by the Company's 2.7% increase in identical sales, partially offset by a reduction in sales related to store closures since the third quarter of fiscal 2018 and lower fuel sales. Identical sales continued to benefit from our growth in online home delivery and Drive Up and Go sales and Own Brands sales growth.
Gross profit margin increased to 28.3% during the third quarter of fiscal 2019 compared to 27.8% during the third quarter of fiscal 2018. Excluding the impact of fuel, gross profit margin increased 40 basis points compared to the third quarter of fiscal 2018, primarily due to improved product mix, including increased Own Brands penetration and lower shrink expense, partially offset by higher rent expense related to sale leaseback transactions.
Selling and administrative expenses increased to 27.0% of sales during the third quarter of fiscal 2019 compared to 26.5% of sales for the third quarter of fiscal 2018. Excluding the impact of fuel, selling and administrative expenses as a percentage of sales increased 40 basis points. The increase in selling and administrative expenses was primarily attributable to higher rent and occupancy costs and strategic investments in digital and technology initiatives.
Interest expense was $154.8 million during the third quarter of fiscal 2019 compared to $213.0 million during the third quarter of fiscal 2018. The decrease in interest expense was primarily attributable to lower average outstanding borrowings and lower average interest rates. The weighted average interest rate during the third quarter of fiscal