ACI Q2 Earnings Beat, FY25 Identical-Sales Growth Outlook Raised

Albertsons Companies, Inc. ACI reported second-quarter fiscal 2025 results, wherein both sales and earnings beat the Zacks Consensus Estimate. Additionally, on a year-over-year basis, the company’s top line increased, while the bottom line declined. 

Strong performance in pharmacy and digital supported improved sales trends, leading the company to raise its fiscal 2025 identical sales and earnings guidance. As a result, shares of this leading food and drug retailer increased 13.4% yesterday. 

The company advanced strategic priorities by enhancing its customer value proposition, leveraging technology and AI to improve operations, and executing productivity initiatives to offset inflationary pressures. Albertsons also continued to invest in technology modernization, store enhancements and shareholder value initiatives to strengthen its long-term growth outlook.

Albertsons’ Quarterly Performance: Key Insights

Albertsons posted adjusted quarterly earnings of 44 cents per share, which beat the Zacks Consensus Estimate of 39 cents. However, the bottom line declined 13.7% from 51 cents reported in the prior-year period. 

Net sales and other revenues of $18,915.8 million were above the Zacks Consensus Estimate of $18,897 million and rose 2% year over year. The year-over-year increase in the top line stemmed from a 2.2% increase in identical sales, with a 19% increase in pharmacy sales serving as the main contributor. Digital sales grew 23% year over year. These gains in net sales and other revenues were partially offset by a decline in fuel sales.

Loyalty membership grew 13% to reach 48.7 million in the second quarter of fiscal 2025 compared with the same period in fiscal 2024.

Insight Into ACI's Q2 Margins & Expenses

The gross profit of $5.12 billion remained flat year over year. However, the gross margin for the quarter under review contracted 60 basis points (bps) year over year to 27% compared with 27.6% in the second quarter of fiscal 2024.

Excluding the impact of fuel and LIFO expense, the gross margin decreased 63 bps year over year. The decrease was primarily caused by strong growth in pharmacy sales, which carry a lower overall gross margin rate, as well as higher delivery and handling costs associated with continued expansion in digital sales. The company also made additional investments in its customer value proposition, funded by savings generated from productivity initiatives.

In the fiscal second quarter, selling and administrative expenses jumped 0.4% to $4.81 billion and declined 40 bps year over year at 25.8% as a percentage of net sales and other revenues. Excluding the impact of fuel, selling and administrative expenses as a percentage of net sales and other revenues decreased 50 bps. This improvement was mainly attributable to leverage on employee-related costs and lower merger-related expenses, partially offset by higher business transformation costs. Ongoing productivity initiatives continued to help offset rising wage rates and other inflationary pressures on operating expenses.

Adjusted EBITDA declined 5.8% year over year to $848.4 million, while the adjusted EBITDA margin was 4.5%, down 40 bps year over year.

ACI’s Q2 Financial Snapshot

Albertsons ended the quarter with cash and cash equivalents of $270.6 million. The company’s long-term debt and finance-lease obligations totaled $6.94 billion as of Sept. 6, 2025, while total stockholders' equity amounted to $3.08 billion.

During the first 28 weeks of fiscal 2025, the company incurred capital expenditures of $950.5 million, primarily related to the completion of 51 store remodels, the opening of three new stores and continued investments in digital and technology platforms. Capital expenditures are forecasted to be in the range of $1.8 billion to $1.9 billion in fiscal 2025.

During the second quarter of fiscal 2025, the company paid a quarterly cash dividend of 15 cents per share on Aug. 8 to its stockholders of record as of July 25, 2025. On Oct. 14, 2025, the company announced its next quarterly dividend of 15 cents per share, payable on Nov. 7 to stockholders of record as of the close of business on Oct. 24, 2025.

For the first 28 weeks of fiscal 2025, the company repurchased 25.7 million shares of its common stock for an aggregate amount of $550.1 million under the existing multi-year $2 billion share repurchase authorization.

On Oct. 14, 2025, subsequent to the end of the second quarter of fiscal 2025, the company entered into an accelerated share repurchase agreement (the ASR Agreement) with JPMorgan Chase Bank, National Association, to repurchase $750 million of its common stock. On the same date, the company also announced that its board of directors had authorized an increase in the share repurchase program from $2 billion to $2.75 billion, inclusive of the ASR Agreement.

ACI Stock Past Three-Month Performance

Sneak Peek Into Albertsons’ FY25 Outlook

The company has updated its fiscal 2025 outlook and now expects identical sales growth to range from 2.2% to 2.75% compared with the previous guidance of 2% to 2.75%. The updated range reflects ongoing strength in pharmacy and digital sales, along with targeted pricing investments in grocery.

Adjusted EBITDA is projected to be between $3.8 billion and $3.9 billion, including approximately $65 million related to the 53rd week. In fiscal 2024, adjusted EBITDA was $4 billion.

Adjusted earnings per share are now expected to be in the range of $2.06 to $2.19 compared with the previously anticipated range of $2.03 to $2.16, indicating accretion from the recently announced $750 million accelerated share repurchase program. The company reported adjusted earnings of $2.34 per share in fiscal 2024.

Shares of this Zacks Rank #3 (Hold) company have lost 6.2% in the past three months compared with the industry's decline of 6.5%.

Three Picks You Can’t Miss

Here, we have highlighted three better-ranked stocks, namely, United Natural Foods, Inc.  UNFI, Grocery Outlet Holding Corp.  GO and Ollie's Bargain Outlet Holdings OLLI.

United Natural is the leading distributor of natural, organic and specialty food and non-food products, currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

UNFI delivered an earnings surprise of 416.2% in the trailing four quarters, on average. The Zacks Consensus Estimate for United Natural’s current fiscal-year sales and earnings indicates growth of 2.4% and nearly 167.6%, respectively, from the year-ago reported quarter.

Grocery Outlet is a high-growth, extreme-value retailer of quality, name-brand consumables and fresh products. It currently carries a Zacks Rank #2 (Buy). GO delivered a trailing four-quarter average earnings surprise of 28.2%. 

The Zacks Consensus Estimate for Grocery Outlet’s current financial-year sales and earnings indicates growth of 8.4% and 1.3%, respectively, from the year-ago reported numbers.

Ollie's Bargain Outlet Holdings is a value retailer of brand-name merchandise at drastically reduced prices and currently carries a Zacks Rank #2. OLLI delivered a trailing four-quarter earnings surprise of 4.2%, on average.

The Zacks Consensus Estimate for Ollie's Bargain’s current fiscal-year sales and earnings indicates a rise of around 16.4% and 16.5%, respectively, from the year-earlier levels.

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