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(Reuters) - Albertsons Companies topped Wall Street expectations for quarterly profit and revenue on Tuesday, on the back of steady demand for groceries and pocket-friendly private label brands.
Consumers in the U.S. have displayed a growing affinity towards private label brands, as they look for cheaper options amid a cost of living crisis.
In May, Albertsons consolidated products from its private labels Signature Farms, Signature Care and Signature Cafe, which include ready-to-eat meals and condiments, under a single label — Signature Select.
Albertsons has also bolstered its loyalty program, which has been drawing customers to its stores despite the grocer’s relatively higher pricing when compared to retail bellwether Walmart, according to analysts. In the quarter, membership for the loyalty program rose by 16% to 35.9 million.
However, gross margins declined 91 basis points to 27.7% compared with 28.1% a year earlier, due to delivery and warehouse costs and rise in store thefts, the company said.
Strong digital sales have also driven revenue for the food and drugs retailer at a time when its pharmacy business is seeing a rapid normalization following gains from COVID-19 vaccinations.
The company’s $25 billion merger with peer retailer Kroger, which was announced in October 2022, has faced pushback from workers and consumer welfare groups even as it awaits a verdict from the Federal Trade Commission.
For the quarter ended June 17, the company’s identical sales rose 4.9%, compared with an increase of 6.8% a year earlier. However, net sales and other revenue of $24.05 billion in the period beat analysts’ average expectation of $23.95 billion, as per data from Refinitiv.
Excluding items, the retailer’s profit was 93 cents per share, beating Street estimates of 85 cents.
Reporting by Juveria Tabassum in Bengaluru; Editing by Krishna Chandra Eluri
