Core Insights - Albertsons Companies, Inc. reported revenue of $18.92 billion for the quarter ended August 2025, reflecting a year-over-year increase of 2% [1] - The company's EPS for the same period was $0.44, down from $0.51 a year ago, but exceeded the consensus estimate of $0.39 by 12.82% [1][2] - The reported revenue slightly surpassed the Zacks Consensus Estimate of $18.9 billion, resulting in a surprise of +0.1% [1] Financial Performance Metrics - Same-store sales increased by 2.2%, outperforming the average estimate of 2% based on five analysts [4] - The number of stores at the end of the quarter was 2,257, which was lower than the estimated 2,267 by four analysts [4] - Total retail square footage was reported at 112.5 million, slightly below the average estimate of 112.93 million [4] - Fuel revenues were $911.3 million, which was below the estimated $951.3 million, representing a year-over-year decline of 4.2% [4] Stock Performance - Over the past month, shares of Albertsons Companies have returned -7.9%, contrasting with the Zacks S&P 500 composite's +1.1% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Market Overview - U.S. stocks showed mixed performance with the Dow up approximately 410 points, S&P 500 up about 0.3%, while NASDAQ was down around 0.2% [1][2] - Federal Reserve Chair Jerome Powell indicated that the Fed's views on inflation and the job market remain largely unchanged, suggesting potential rate cuts ahead [2][3] - The tech sector lagged, particularly with major companies like Nvidia, Amazon, and Meta trading in the red, while AMD saw a 3% increase due to a significant deal with Oracle [1][2] Federal Reserve Insights - Powell noted that downside risks to employment have increased, and the Fed is considering two more rate cuts for the remainder of the year [2][3] - The Fed's balance sheet currently stands at $6.5 trillion, significantly larger than pre-2020 levels, with ongoing reductions in Treasury and mortgage-backed securities [2][3] - Powell emphasized that policy decisions will be made based on evolving economic conditions rather than a predetermined path [2][3] U.S.-China Trade Tensions - Recent escalations in U.S.-China trade tensions have raised concerns among investors regarding global supply chains and inflation [2] - Analysts believe that despite the tensions, a resolution is likely due to the mutual need for cooperation between the two largest economies [2] Automotive Industry Developments - General Motors announced a $1.6 billion charge related to its EV business, indicating a reassessment of its electric vehicle strategy amid slowing demand [3][4] - Ford is facing production challenges due to a fire at a key aluminum plant, which could impact several automakers reliant on aluminum parts [3][4] - Analysts expect more automakers to announce similar charges as they adjust to changing market conditions and regulatory environments [3][4] Technology Sector Updates - AMD's partnership with Oracle to deploy 50,000 AI chips marks a significant competitive move against Nvidia, which maintains a strong market position [3][4] - Intel is also working on new data center chips as part of its turnaround strategy, aiming to expand its presence in the AI market [3][4] Retail Sector Highlights - Walmart is enhancing its e-commerce strategy by partnering with OpenAI to create a chat-based shopping experience, aiming to improve customer convenience [3][4] - Domino's reported better-than-expected sales growth, driven by value offerings and promotions, indicating strong consumer demand despite macroeconomic pressures [3][4] - Albertsons raised its full-year earnings guidance, benefiting from strong performance in its pharmacy and private label segments [3][4]

[PART I - FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1 - Condensed Consolidated Financial Statements (unaudited)](index=3&type=section&id=Item%201%20-%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements for Albertsons Companies, Inc. and its subsidiaries, including the balance sheets, statements of operations and comprehensive income, cash flows, and stockholders' equity, along with accompanying notes detailing significant accounting policies, fair value measurements, debt, employee benefits, commitments, and segment information [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in millions) | Metric | September 6, 2025 | February 22, 2025 | | :------------------------------------------ | :------------------ | :------------------ | | Total Assets | $26,850.5 | $26,755.7 | | Total Liabilities | $23,771.0 | $23,369.8 | | Total Stockholders' Equity | $3,079.5 | $3,385.9 | | Current maturities of long-term debt and finance lease obligations | $1,186.4 | $57.6 | - Current maturities of long-term debt and finance lease obligations significantly increased from **$57.6 million** to **$1,186.4 million**[8](index=8&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) Condensed Consolidated Statements of Operations and Comprehensive Income (in millions, except per share data) | Metric | 12 weeks ended Sep 6, 2025 | 12 weeks ended Sep 7, 2024 | 28 weeks ended Sep 6, 2025 | 28 weeks ended Sep 7, 2024 | | :------------------------------------------ | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Net sales and other revenue | $18,915.8 | $18,551.5 | $43,796.6 | $42,816.9 | | Gross margin | $5,106.6 | $5,121.3 | $11,844.9 | $11,860.2 | | Operating income | $295.3 | $292.0 | $744.6 | $751.6 | | Net income | $168.5 | $145.5 | $404.9 | $386.2 | | Basic net income per Class A common share | $0.30 | $0.25 | $0.71 | $0.67 | | Diluted net income per Class A common share | $0.30 | $0.25 | $0.71 | $0.66 | - Net sales and other revenue increased by **2.0%** for the 12 weeks and **2.3%** for the 28 weeks ended September 6, 2025, compared to the prior year periods[9](index=9&type=chunk) - Net income increased by **15.8%** for the 12 weeks and **4.8%** for the 28 weeks ended September 6, 2025, compared to the prior year periods[9](index=9&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (in millions) | Cash Flow Activity | 28 weeks ended Sep 6, 2025 | 28 weeks ended Sep 7, 2024 | | :----------------------------------- | :------------------------- | :------------------------- | | Net cash provided by operating activities | $1,282.0 | $1,374.1 | | Net cash used in investing activities | $(837.9) | $(925.3) | | Net cash used in financing activities | $(467.0) | $(357.8) | | Net (decrease) increase in cash and cash equivalents and restricted cash | $(22.9) | $91.0 | | Cash and cash equivalents and restricted cash at end of period | $275.0 | $284.2 | - Net cash provided by operating activities decreased by **$92.1 million** for the 28 weeks ended September 6, 2025, compared to the prior year[11](index=11&type=chunk) - The company experienced a net decrease in cash and cash equivalents of **$22.9 million** for the 28 weeks ended September 6, 2025, a shift from a net increase of **$91.0 million** in the prior year[11](index=11&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Changes in Stockholders' Equity (in millions) | Metric | Balance as of Feb 22, 2025 | Balance as of Sep 6, 2025 | | :----------------------------------- | :------------------------- | :------------------------- | | Total stockholders' equity | $3,385.9 | $3,079.5 | | Treasury stock, at cost | $(386.7) | $(936.8) | | Retained earnings | $1,487.9 | $1,721.0 | | Cash dividends declared on common stock | $(169.6) (YTD) | $(139.0) (YTD 2024) | | Repurchase of common stock | $(550.1) (YTD) | $0 (YTD 2024) | - Total stockholders' equity decreased from **$3,385.9 million** to **$3,079.5 million** between February 22, 2025, and September 6, 2025, primarily due to significant treasury stock repurchases[8](index=8&type=chunk)[13](index=13&type=chunk) - The company repurchased **$550.1 million** of common stock during the first 28 weeks of fiscal 2025[13](index=13&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=8&type=section&id=NOTE%201%20-%20BASIS%20OF%20PRESENTATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) - LIFO expense increased to **$11.0 million** for the 12 weeks ended September 6, 2025, from **$4.8 million** in the prior year, and to **$28.3 million** for the 28 weeks ended September 6, 2025, from **$19.4 million** in the prior year[19](index=19&type=chunk) - The Board of Directors authorized an increase to the share repurchase program from **$2.0 billion** to **$2.75 billion**, including a **$750 million** accelerated share repurchase agreement, subsequent to the reporting period[21](index=21&type=chunk) Effective Income Tax Rates | Period | Effective Tax Rate (2025) | Effective Tax Rate (2024) | | :------------------------- | :------------------------ | :------------------------ | | 12 weeks ended Sep 6/7 | 23.3% | 22.0% | | 28 weeks ended Sep 6/7 | 23.8% | 22.2% | Net Sales and Other Revenue by Product Type (in millions) | Product Type | 12 weeks ended Sep 6, 2025 | % of Total (2025) | 12 weeks ended Sep 7, 2024 | % of Total (2024) | | :------------- | :------------------------- | :---------------- | :------------------------- | :---------------- | | Non-perishables | $9,220.5 | 48.8% | $9,265.0 | 49.9% | | Fresh | $5,946.6 | 31.4% | $5,917.4 | 31.9% | | Pharmacy | $2,536.8 | 13.4% | $2,132.0 | 11.5% | | Fuel | $911.3 | 4.8% | $951.3 | 5.2% | | Other | $300.6 | 1.6% | $285.8 | 1.5% | | **Total** | **$18,915.8** | **100.0%** | **$18,551.5** | **100.0%** | - Pharmacy sales as a percentage of total revenue increased from **11.5%** to **13.4%** for the 12 weeks ended September 6, 2025, while fuel sales decreased from **5.2%** to **4.8%**[29](index=29&type=chunk) [NOTE 2 - FAIR VALUE MEASUREMENTS](index=11&type=section&id=NOTE%202%20-%20FAIR%20VALUE%20MEASUREMENTS) Assets Measured at Fair Value on a Recurring Basis (in millions) | Asset Type | September 6, 2025 (Total) | February 22, 2025 (Total) | | :------------------------ | :------------------------ | :------------------------ | | Short-term investments | $16.2 | $41.3 | | Non-current investments | $113.7 | $118.8 | | Derivative contracts | $0.7 | $0.3 | | **Total Assets** | **$130.6** | **$160.4** | | **Total Liabilities** | **$0.5** | **$0.6** | - The fair value of total debt as of September 6, 2025, was **$7,778.7 million**, compared to a carrying value of **$7,777.1 million**[42](index=42&type=chunk) - Retail store impairment losses were **$6.2 million** for the 12 weeks and **$8.4 million** for the 28 weeks ended September 6, 2025[44](index=44&type=chunk) [NOTE 3 - LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS](index=13&type=section&id=NOTE%203%20-%20LONG-TERM%20DEBT%20AND%20FINANCE%20LEASE%20OBLIGATIONS) Long-Term Debt and Finance Lease Obligations (in millions) | Debt Type | September 6, 2025 | February 22, 2025 | | :------------------------------------------ | :------------------ | :------------------ | | Senior Unsecured Notes due 2026 to 2033 | $6,517.9 | $6,517.0 | | New Albertsons L.P. Notes due 2026 to 2031 | $487.0 | $484.6 | | Safeway Inc. Notes due 2027 to 2031 | $376.2 | $375.9 | | ABL Facility | $325.0 | $0 | | Finance lease obligations | $406.0 | $427.9 | | **Total debt** | **$8,126.5** | **$7,820.1** | | Less current maturities | $(1,186.4) | $(57.6) | | **Long-term portion** | **$6,940.1** | **$7,762.5** | - The ABL Facility had **$325.0 million** outstanding as of September 6, 2025, compared to no amounts outstanding as of February 22, 2025. The maturity date was extended to August 27, 2030[46](index=46&type=chunk)[47](index=47&type=chunk) - The company issued **$600.0 million** of 6.250% senior unsecured notes due March 15, 2033, and used the proceeds to redeem **$600.0 million** of 7.500% senior unsecured notes due March 15, 2026, effectively refinancing debt at a lower interest rate[48](index=48&type=chunk) [NOTE 4 - EMPLOYEE BENEFIT PLANS](index=14&type=section&id=NOTE%204%20-%20EMPLOYEE%20BENEFIT%20PLANS) Net Pension and Post-Retirement (Income) Expense (in millions) | Component | 12 weeks ended Sep 6, 2025 | 12 weeks ended Sep 7, 2024 | 28 weeks ended Sep 6, 2025 | 28 weeks ended Sep 7, 2024 | | :-------------------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Pension (Income) Expense, net | $(26.7) | $6.1 | $(26.7) | $7.9 | | Other post-retirement benefits (Income) Expense, net | $0 | $(0.1) | $(0.1) | $(0.1) | - The company recorded a pension settlement gain of **$26.8 million** during the 12 and 28 weeks ended September 6, 2025, by purchasing a group annuity policy and transferring **$290.0 million** of pension plan assets[50](index=50&type=chunk) - Contributions to defined pension and post-retirement benefit plans for the 28 weeks ended September 6, 2025, were **$45.9 million**, up from **$37.1 million** in the prior year[49](index=49&type=chunk) [NOTE 5 - COMMITMENTS AND CONTINGENCIES AND OFF BALANCE SHEET ARRANGEMENTS](index=14&type=section&id=NOTE%205%20-%20COMMITMENTS%20AND%20CONTINGENCIES%20AND%20OFF%20BALANCE%20SHEET%20ARRANGEMENTS) - The company is vigorously defending two False Claims Act (FCA) qui tam actions (Proctor and Schutte) alleging overcharging federal government healthcare programs, with potential damages exceeding **$100 million** before trebling and penalties. The Supreme Court reversed lower court rulings, remanding cases for further review. The Schutte trial concluded with a judgment in favor of the company on March 12, 2025, while the Proctor trial is scheduled for June 22, 2026[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk) - In the PBM Litigation, the company is a defendant in a lawsuit challenging prescription-drug prices. Proceedings were stayed through September 29, 2025, for settlement discussions. Prime Therapeutics LLC was dismissed from the litigation on October 10, 2025[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) - The Kroger Co. merger agreement was terminated on December 10, 2024, due to preliminary and permanent injunctions. Albertsons is suing Kroger for willful breach and the **$600 million** termination fee, with Kroger filing counterclaims. Trial is scheduled for October 19, 2026[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk) - In the Opioid Litigation, the company has settled 15 cases in New Mexico and Nevada for **$21.5 million**, paid by insurers. Active state court claims remain in Dallas County (TX), Washington State, and Philadelphia (PA). The company believes it has substantial factual and legal defenses[67](index=67&type=chunk)[68](index=68&type=chunk) [NOTE 6 - OTHER COMPREHENSIVE INCOME OR LOSS](index=19&type=section&id=NOTE%206%20-%20OTHER%20COMPREHENSIVE%20INCOME%20OR%20LOSS) Changes in Accumulated Other Comprehensive Income (AOCI) (in millions) | Metric | 28 weeks ended Sep 6, 2025 | 28 weeks ended Sep 7, 2024 | | :------------------------------------------ | :------------------------- | :------------------------- | | Beginning AOCI balance | $94.7 | $88.0 | | Current-period other comprehensive (loss) income, net of tax | $(12.5) | $4.6 | | Ending AOCI balance | $82.2 | $92.6 | - The company reported a current-period other comprehensive loss of **$12.5 million**, net of tax, for the 28 weeks ended September 6, 2025, compared to an income of **$4.6 million** in the prior year[77](index=77&type=chunk) [NOTE 7 - SEGMENT INFORMATION](index=19&type=section&id=NOTE%207%20-%20SEGMENT%20INFORMATION) - The company operates as one reportable segment, with retail operating divisions geographically based and having similar economic characteristics[78](index=78&type=chunk)[79](index=79&type=chunk) - Retail segment EBITDA, used by the Chief Operating Decision Maker (CODM) to evaluate performance, decreased to **$991.4 million** for the 12 weeks ended September 6, 2025, from **$1,025.9 million** in the prior year, and to **$2,274.1 million** for the 28 weeks ended September 6, 2025, from **$2,395.7 million** in the prior year[80](index=80&type=chunk)[83](index=83&type=chunk) [NOTE 8 - NET INCOME PER CLASS A COMMON SHARE](index=21&type=section&id=NOTE%208%20-%20NET%20INCOME%20PER%20CLASS%20A%20COMMON%20SHARE) Net Income Per Class A Common Share | Metric | 12 weeks ended Sep 6, 2025 | 12 weeks ended Sep 7, 2024 | 28 weeks ended Sep 6, 2025 | 28 weeks ended Sep 7, 2024 | | :------------------------------------------ | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Basic net income per Class A common share | $0.30 | $0.25 | $0.71 | $0.67 | | Diluted net income per Class A common share | $0.30 | $0.25 | $0.71 | $0.66 | - Basic and diluted net income per Class A common share increased for both the 12-week and 28-week periods ended September 6, 2025, compared to the prior year[87](index=87&type=chunk) [Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202%20-%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance and condition, discussing key factors impacting results, non-GAAP measures, and a detailed comparison of the second quarter and first 28 weeks of fiscal 2025 against the prior year, including sales, margins, expenses, and liquidity [FORWARD-LOOKING STATEMENTS AND FACTORS THAT IMPACT OUR OPERATING RESULTS AND TRENDS](index=22&type=section&id=FORWARD-LOOKING%20STATEMENTS%20AND%20FACTORS%20THAT%20IMPACT%20OUR%20OPERATING%20RESULTS%20AND%20TRENDS) - The report contains forward-looking statements subject to risks and uncertainties, including macroeconomic conditions, consumer behavior, wage rates, geopolitical environment, and the impact of the terminated merger with Kroger[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk) [NON-GAAP FINANCIAL MEASURES](index=23&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) - The company uses non-GAAP measures like EBITDA, Adjusted EBITDA, Adjusted net income, and Adjusted net income per Class A common share to evaluate ongoing core performance, excluding items management does not consider in assessing core operations[94](index=94&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk) [SECOND QUARTER OF FISCAL 2025 OVERVIEW](index=25&type=section&id=SECOND%20QUARTER%20OF%20FISCAL%202025%20OVERVIEW) - As of September 6, 2025, the company operated **2,257 stores**, **1,720 pharmacies**, **1,254 in-store branded coffee shops**, **405 fuel centers**, **22 distribution centers**, and **19 manufacturing facilities**[99](index=99&type=chunk) - Identical sales, excluding fuel, increased **2.2%** in Q2 fiscal 2025. Digital sales grew **23%**, and loyalty members increased **13%** to **48.7 million**[101](index=101&type=chunk)[106](index=106&type=chunk) - Capital expenditures for the first 28 weeks of fiscal 2025 were approximately **$951 million**, including **51 remodels** and **3 new store openings**[104](index=104&type=chunk) - Capital returns to shareholders during the first 28 weeks of fiscal 2025 included **$169.6 million** in common stock dividends and **$550.1 million** for share repurchases[104](index=104&type=chunk) [RESULTS OF OPERATIONS](index=27&type=section&id=RESULTS%20OF%20OPERATIONS) [Net Sales and Other Revenue](index=28&type=section&id=Net%20Sales%20and%20Other%20Revenue) - Net sales and other revenue increased **2.0%** to **$18,915.8 million** for Q2 fiscal 2025 and **2.3%** to **$43,796.6 million** for the first 28 weeks of fiscal 2025, primarily driven by a **2.2%** and **2.6%** increase in identical sales (adjusted for labor strikes), respectively, with strong growth in pharmacy sales[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) - The increase in net sales was partially offset by lower fuel sales[109](index=109&type=chunk)[110](index=110&type=chunk) [Gross Margin](index=29&type=section&id=Gross%20Margin) - Gross margin rate decreased to **27.0%** in Q2 fiscal 2025 (from **27.6%** in Q2 fiscal 2024) and for the first 28 weeks of fiscal 2025 (from **27.7%** in the prior year)[114](index=114&type=chunk)[115](index=115&type=chunk) - Excluding fuel and LIFO expense, the gross margin rate decreased by **63 basis points** for Q2 and **75 basis points** for the first 28 weeks, primarily due to strong growth in lower-margin pharmacy sales and increased delivery and handling costs for digital sales[114](index=114&type=chunk)[115](index=115&type=chunk) [Selling and Administrative Expenses](index=29&type=section&id=Selling%20and%20Administrative%20Expenses) - Selling and administrative expenses as a percentage of Net sales and other revenue decreased to **25.4%** in Q2 fiscal 2025 (from **25.8%** in Q2 fiscal 2024) and for the first 28 weeks of fiscal 2025 (from **25.8%** in the prior year)[116](index=116&type=chunk)[117](index=117&type=chunk) - Excluding fuel, these expenses decreased by **50 basis points** for Q2 and **57 basis points** for the first 28 weeks, mainly due to leveraging employee costs and lower merger-related costs, partially offset by increased business transformation costs[116](index=116&type=chunk)[117](index=117&type=chunk) [Loss (Gain) on Property Dispositions and Impairment Losses, Net](index=29&type=section&id=Loss%20(Gain)%20on%20Property%20Dispositions%20and%20Impairment%20Losses,%20Net) - For Q2 fiscal 2025, net loss on property dispositions and impairment losses was **$4.4 million**, a significant reduction from **$43.9 million** in Q2 fiscal 2024[118](index=118&type=chunk) - For the first 28 weeks of fiscal 2025, the company recorded a net gain of **$27.5 million**, a reversal from a **$49.2 million** net loss in the prior year, primarily due to net gains from real estate sales[119](index=119&type=chunk)[120](index=120&type=chunk) [Interest Expense, Net](index=30&type=section&id=Interest%20Expense,%20Net) - Interest expense, net, was **$105.3 million** for Q2 fiscal 2025 (up from **$103.6 million**) and **$247.1 million** for the first 28 weeks of fiscal 2025 (down from **$249.3 million**)[121](index=121&type=chunk)[122](index=122&type=chunk) - The weighted average interest rate remained consistent at **5.5%** for both periods[121](index=121&type=chunk)[122](index=122&type=chunk) [Other (Income) Expense, Net](index=30&type=section&id=Other%20(Income)%20Expense,%20Net) - The company reported other income, net, of **$29.7 million** for Q2 fiscal 2025 and **$33.6 million** for the first 28 weeks of fiscal 2025, primarily driven by a **$26.8 million** pension settlement income[123](index=123&type=chunk)[124](index=124&type=chunk) - This is a significant improvement from other expense, net, of **$1.9 million** and **$5.9 million** in the respective prior year periods[123](index=123&type=chunk)[124](index=124&type=chunk) [Income Taxes](index=30&type=section&id=Income%20Taxes) - Income tax expense for Q2 fiscal 2025 was **$51.2 million** (**23.3%** effective tax rate), up from **$41.0 million** (**22.0%** effective tax rate) in Q2 fiscal 2024[125](index=125&type=chunk) - For the first 28 weeks of fiscal 2025, income tax expense was **$126.2 million** (**23.8%** effective tax rate), up from **$110.2 million** (**22.2%** effective tax rate) in the prior year, primarily due to the reduction of a tax reserve in fiscal 2024[126](index=126&type=chunk) [Net Income and Adjusted Net Income](index=30&type=section&id=Net%20Income%20and%20Adjusted%20Net%20Income) Net Income and Adjusted Net Income (in millions, except per share data) | Metric | 12 weeks ended Sep 6, 2025 | 12 weeks ended Sep 7, 2024 | 28 weeks ended Sep 6, 2025 | 28 weeks ended Sep 7, 2024 | | :------------------------------------------ | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Net income | $168.5 | $145.5 | $404.9 | $386.2 | | Basic EPS | $0.30 | $0.25 | $0.71 | $0.67 | | Diluted EPS | $0.30 | $0.25 | $0.71 | $0.66 | | Adjusted net income | $248.4 | $301.0 | $567.3 | $692.6 | | Adjusted diluted EPS | $0.44 | $0.51 | $0.98 | $1.17 | - Adjusted net income decreased for both the 12-week and 28-week periods ended September 6, 2025, compared to the prior year, despite an increase in GAAP net income[127](index=127&type=chunk)[128](index=128&type=chunk) [Adjusted EBITDA](index=31&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA (in millions) | Metric | 12 weeks ended Sep 6, 2025 | 12 weeks ended Sep 7, 2024 | 28 weeks ended Sep 6, 2025 | 28 weeks ended Sep 7, 2024 | | :------------------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Adjusted EBITDA | $848.4 | $900.6 | $1,959.4 | $2,084.5 | | % of Net sales and other revenue | 4.5% | 4.9% | 4.5% | 4.9% | - Adjusted EBITDA decreased to **$848.4 million** (**4.5%** of revenue) for Q2 fiscal 2025 from **$900.6 million** (**4.9%** of revenue) in the prior year, and to **$1,959.4 million** (**4.5%** of revenue) for the first 28 weeks of fiscal 2025 from **$2,084.5 million** (**4.9%** of revenue) in the prior year[129](index=129&type=chunk) [Reconciliation of Non-GAAP Measures](index=31&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) Reconciliation of Net Income to Adjusted Net Income (in millions) | Adjustment | 12 weeks ended Sep 6, 2025 | 12 weeks ended Sep 7, 2024 | 28 weeks ended Sep 6, 2025 | 28 weeks ended Sep 7, 2024 | | :------------------------------------------ | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Net income | $168.5 | $145.5 | $404.9 | $386.2 | | Business transformation | $35.3 | $20.5 | $73.6 | $37.8 | | Equity-based compensation expense | $18.7 | $29.5 | $52.4 | $66.2 | | Loss (gain) on property dispositions and impairment losses, net | $4.4 | $43.9 | $(27.5) | $49.2 | | LIFO expense | $11.0 | $4.8 | $28.3 | $19.4 | | Merger-related costs | $19.0 | $67.4 | $38.0 | $159.7 | | Certain legal and regulatory accruals and settlements, net | $8.4 | $8.7 | $11.0 | $(0.2) | | Amortization of debt discount and deferred financing costs | $5.2 | $3.6 | $11.4 | $8.5 | | Amortization of intangible assets resulting from acquisitions | $11.1 | $11.1 | $25.9 | $25.8 | | Miscellaneous adjustments | $(8.1) | $13.8 | $(2.0) | $32.8 | | Tax impact of adjustments to Adjusted net income | $(25.1) | $(47.8) | $(48.7) | $(92.8) | | **Adjusted net income** | **$248.4** | **$301.0** | **$567.3** | **$692.6** | - Merger-related costs significantly decreased for both periods in fiscal 2025 compared to fiscal 2024, reflecting the termination of the Kroger merger[130](index=130&type=chunk)[131](index=131&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=34&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) - Net cash provided by operating activities decreased to **$1,282.0 million** for the first 28 weeks of fiscal 2025 from **$1,374.1 million** in the prior year, primarily due to lower Adjusted EBITDA and changes in working capital[137](index=137&type=chunk) - Net cash used in investing activities decreased to **$837.9 million** for the first 28 weeks of fiscal 2025 from **$925.3 million** in the prior year, mainly due to lower payments for property, equipment, and intangibles[138](index=138&type=chunk)[139](index=139&type=chunk) - Net cash used in financing activities increased to **$467.0 million** for the first 28 weeks of fiscal 2025 from **$357.8 million** in the prior year, driven by common stock repurchases and dividends[140](index=140&type=chunk)[141](index=141&type=chunk) - The company paid **$169.6 million** in common stock dividends (**$0.30 per share**) and repurchased **25.7 million shares** for **$550.1 million** during the first 28 weeks of fiscal 2025[144](index=144&type=chunk)[145](index=145&type=chunk) - The company estimates its liquidity needs over the next 12 months to be in the range of **$6.5 billion** to **$7.0 billion**, which it believes can be met through cash on hand, operating cash flows, and the ABL Facility[147](index=147&type=chunk) [CRITICAL ACCOUNTING POLICIES](index=36&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) - The company refers to its Annual Report on Form 10-K for the fiscal year ended February 22, 2025, for a discussion of its significant accounting policies[149](index=149&type=chunk) [RECENTLY ISSUED AND RECENTLY ADOPTED ACCOUNTING STANDARDS](index=36&type=section&id=RECENTLY%20ISSUED%20AND%20RECENTLY%20ADOPTED%20ACCOUNTING%20STANDARDS) - The company is currently evaluating the impact of recently issued ASUs on Income Taxes (ASU 2023-09), Expense Disaggregation Disclosures (ASU 2024-03), and Internal-Use Software (ASU 2025-06)[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk)[150](index=150&type=chunk) [Item 3 - Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203%20-%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reported no material changes in its exposure to market risk compared to the information provided in its most recent annual report on Form 10-K - No material changes in market risk exposure from the previous annual report on Form 10-K[151](index=151&type=chunk) [Item 4 - Controls and Procedures](index=36&type=section&id=Item%204%20-%20Controls%20and%20Procedures) The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period. There were no material changes in internal control over financial reporting during the second quarter of fiscal 2025 - Disclosure controls and procedures were effective as of the end of the period covered by this Form 10-Q[152](index=152&type=chunk) - No material changes in internal control over financial reporting occurred during the second quarter of fiscal 2025[153](index=153&type=chunk) [PART II - OTHER INFORMATION](index=37&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1 - Legal Proceedings](index=37&type=section&id=Item%201%20-%20Legal%20Proceedings) The company is involved in various legal proceedings, including trade practices, wage and hour laws, and real estate disputes. Management believes that any resulting liability will not have a material adverse effect on the company's financial condition, though outcomes involve substantial uncertainties. Environmental matters are also subject to regulation, with a disclosure threshold of $1 million for monetary sanctions - The company is subject to various claims and lawsuits, including those related to trade practices, wage and hour laws, real estate disputes, and other matters arising in the ordinary course of business[154](index=154&type=chunk) - Management believes that any resulting liability from these matters, including punitive damages, will not have a material adverse effect on the company's business or overall financial condition[154](index=154&type=chunk) - Environmental matters are subject to regulation, with a disclosure threshold of **$1 million** for monetary sanctions[156](index=156&type=chunk) [Item 1A - Risk Factors](index=37&type=section&id=Item%201A%20-%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended February 22, 2025 - No material changes to the risk factors previously included in the Annual Report on Form 10-K for the fiscal year ended February 22, 2025[157](index=157&type=chunk) [Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202%20-%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds from such sales. However, it repurchased 11.5 million shares of common stock for $235.3 million during the second quarter of fiscal 2025 under its $2.0 billion share repurchase program - No unregistered sales of equity securities or use of proceeds were reported[158](index=158&type=chunk)[159](index=159&type=chunk) Common Stock Repurchase Activity (Q2 Fiscal 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Dollar Value of Shares that May Yet be Purchased (in millions) | | :-------------------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------- | | June 15, 2025 through July 12, 2025 | 3,325,010 | $21.79 | $1,532.5 | | July 13, 2025 through August 9, 2025 | 4,089,720 | $19.90 | $1,451.1 | | August 10, 2025 through September 6, 2025 | 4,083,736 | $19.38 | $1,372.0 | | **Total** | **11,498,466** | **$20.26** | **$1,372.0** | [Item 3 - Defaults Upon Senior Securities](index=38&type=section&id=Item%203%20-%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - No defaults upon senior securities were reported[162](index=162&type=chunk) [Item 4 - Mine Safety Disclosures](index=38&type=section&id=Item%204%20-%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[163](index=163&type=chunk) [Item 5 - Other Information](index=38&type=section&id=Item%205%20-%20Other%20Information) During the second quarter of fiscal 2025, none of the company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during the second quarter of fiscal 2025[164](index=164&type=chunk) [Item 6 - Exhibits](index=38&type=section&id=Item%206%20-%20Exhibits) This section lists the exhibits filed with the 10-Q report, including the Fifth Amended and Restated Asset-Based Revolving Credit Agreement, certifications from executive officers (302 and 906), and Inline XBRL documents - Exhibits include the Fifth Amended and Restated Asset-Based Revolving Credit Agreement, certifications of the Principal Executive Officer and Principal Financial Officer (pursuant to Sections 302 and 906 of Sarbanes-Oxley Act), and Inline XBRL documents[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk) [SIGNATURES](index=40&type=section&id=SIGNATURES) - The report was signed on October 14, 2025, by Susan Morris, Chief Executive Officer and Director, and Sharon McCollam, President and Chief Financial Officer[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk)

Core Insights - Albertsons' stock surged 14.4% to $19.41 following the release of its second quarter earnings, marking its highest level since early September [1][2]. Financial Performance - The company raised its full-year adjusted earnings guidance from $2.03 to $2.16 per share, now projecting between $2.06 and $2.19 per share [2]. - Albertsons increased the lower end of its sales guidance, now expecting growth between 2.2% and 2.75%, up from the previous range of 2.0% to 2.75%, driven by strong pharmacy sales [2]. - Digital sales experienced a significant increase of 23%, contributing to net sales of $18.9 billion, compared to $18.5 billion year-over-year [2]. Stock Buyback Program - Albertsons announced an accelerated share buyback program with JPMorgan Chase Bank, committing to purchase $750 million of its shares, raising the total repurchase program from $2 billion to $2.75 billion [5]. Market Context - Despite the recent surge, Albertsons' shares are down 3.8% year-to-date and faced a decline over the summer, attributed to increased competition in the grocery sector, particularly from Amazon and Walmart [7]. - Food prices have been rising, with a 3.2% increase noted in August, outpacing overall inflation of 2.9% [7].

Group 1 - Crude Value Insights provides an investing service and community focused on oil and natural gas, emphasizing cash flow and companies that generate it [1] - The service offers a model account with over 50 stocks, in-depth cash flow analyses of exploration and production (E&P) firms, and live chat discussions about the sector [1] Group 2 - A two-week free trial is available for new subscribers, promoting engagement with the oil and gas market [2]

Group 1 - Crude Value Insights provides an investment service and community focused on the oil and natural gas sectors, emphasizing cash flow and companies that generate it [1] - The service offers subscribers access to a model account with over 50 stocks, detailed cash flow analyses of exploration and production (E&P) firms, and live chat discussions about the sector [1] Group 2 - A two-week free trial is available for new subscribers, promoting engagement with the oil and gas market [2]

Core Insights - Albertsons is enhancing customer engagement through investments in loyalty and personalization, which are integrated with its promotional strategies [3][7] - Digital sales have shown significant growth, with a 23% year-over-year increase, while same-store sales grew by 2.2% [3][7] Group 1: Customer Engagement Strategies - The Albertsons for U loyalty program has seen a 13% year-over-year increase in membership, reaching 48.7 million [7] - Nearly 40% of engaged households are utilizing the automatic cash-off feature to redeem loyalty points for discounts at checkout [5][7] Group 2: Technology and Personalization - The Ask AI tool is improving personalization by allowing customers to ask for specific product recommendations, enhancing the shopping experience [4][7] - AI technology is being scaled across various business functions, including data analysis and customer service, to further improve customer experience [4][7]

Market Overview - US stock markets are facing increased volatility due to escalating trade tensions between the US and China, overshadowing a strong start to the third-quarter earnings season [1] - Major indexes opened lower, reflecting investor concerns over Beijing's retaliatory measures, despite a mixed recovery attempt by midday [1][2] Market Performance - The Dow Jones Industrial Average (DJIA) initially dropped by approximately 383 points (0.8%) but narrowed its decline to around 72 points by midday [2] - The S&P 500 (SPX) fell 1% at the open, settling to a loss of about 30 points by midday [2] - The Nasdaq Composite (IXIC) experienced a more significant decline, shedding 1.5% initially and remaining down by approximately 196 points at midday [2] Earnings Season Highlights - Major financial companies such as JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C) reported earnings that exceeded analysts' estimates [6] - Despite beating profit forecasts, JPMorgan Chase (JPM) saw its shares decline by 3.8% in early trading, while Wells Fargo (WFC) shares rose by 3.5% following strong performance [6] Corporate News - Broadcom (AVGO) shares surged nearly 10% after announcing an AI partnership with OpenAI to develop custom chips and networking components [7] - Other AI-related tech stocks, including Nvidia (NVDA) and Micron Technology (MU), also saw gains of about 2.9% and over 6%, respectively [8] - Bloom Energy Corp. (BE) shares soared 26.5% after securing a $5 billion deal with Brookfield Asset Management for fuel cell installations in AI data centers [12] - Fastenal Company (FAST) shares plunged 7.5% after missing third-quarter earnings estimates [12] - Albertsons Cos. (ACI) stock jumped 10% after reporting better-than-expected fiscal second-quarter results and raising its full-year outlook [12] - Ericsson (ERIC) shares rose 15% pre-bell after reporting third-quarter profit above expectations and anticipating increased shareholder distributions [12] - Johnson & Johnson (JNJ) experienced a 1.8% decline after announcing plans to separate its orthopedics business into a standalone company [12] - General Motors (GM) stock fell as the automaker plans to reduce its electric vehicle manufacturing capacity due to decreased demand [12] - USA Rare Earth Inc. (USAR) shares jumped 18.6% amid renewed US-China trade and tariff conflicts concerning rare earth minerals [12] Economic Outlook - Investors are closely monitoring the upcoming Federal Reserve's FOMC meeting scheduled for October 28-29, where a rate cut is widely expected [4] - The anticipated rate cut is driven by concerns over a weakening labor market, with a high probability (97-98%) of a quarter-point reduction [4] - Economic data releases, including CPI and PPI for September, are expected to be delayed due to an ongoing US government shutdown, but updates on industrial production and manufacturing surveys are still anticipated [5]

Core Viewpoint - Albertsons Companies, Inc. reported strong second-quarter earnings and sales, leading to an 11% surge in share price, driven by digital growth and rising identical-store sales, alongside a $750 million accelerated share repurchase and an increased full-year profit outlook [1][7]. Financial Performance - The company achieved second-quarter adjusted earnings per share of 44 cents, surpassing the analyst consensus estimate of 40 cents [1]. - Quarterly sales reached $18.915 billion, reflecting a 2% year-over-year increase, exceeding the expected $18.898 billion [2]. - Identical sales rose by 2.2% (as adjusted), while digital sales experienced a significant jump of 23% [2]. - Adjusted EBITDA for the second quarter was $848.4 million, down from $900.6 million in the previous year, with an adjusted EBITDA margin of 4.5%, compared to 4.9% in the year-ago period [4]. Margin and Cost Analysis - The gross margin rate decreased to 27.0% from 27.6% year-over-year, with a 63 basis points decline when excluding fuel and LIFO, attributed to a higher pharmacy mix and increased delivery/handling costs due to digital growth [3]. Capital Allocation and Shareholder Returns - The company initiated an accelerated share repurchase (ASR) program with JPMorgan to buy back $750 million of common stock and increased the total share repurchase authorization from $2.0 billion to $2.75 billion [5]. - A quarterly dividend of 15 cents per share was declared, payable on November 7 to shareholders of record on October 24 [5]. Outlook - Albertsons raised its fiscal 2025 adjusted EPS outlook to a range of $2.06–$2.19, up from $2.03–$2.16, compared to the analyst estimate of $2.10 [7]. - The company anticipates Adjusted EBITDA of $3.8–$3.9 billion, which includes approximately $65 million from the 53rd week [7].

Core Viewpoint - Albertsons Companies (ACI.US) experienced a significant rebound of over 12%, closing at $19, following the release of its Q2 fiscal year 2025 earnings report, which exceeded market expectations [1] Financial Performance - The company reported Q2 fiscal year 2025 revenue of $18.9158 billion and adjusted earnings per share (EPS) of $0.44, both surpassing market forecasts [1] - Albertsons raised its fiscal year 2025 adjusted EPS guidance from a range of $2.03-$2.16 to $2.06-$2.19, which is above the analyst consensus of $2.10 [1] - The company anticipates adjusted EBITDA for the full year to reach between $3.8 billion and $3.9 billion [1] Shareholder Returns - Albertsons announced an increase in its stock buyback program from $2 billion to $2.75 billion [1] - The company also signed a $750 million accelerated stock repurchase agreement [1]