[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis [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, including balance sheets, statements of operations, cash flows, and stockholders' equity, along with detailed notes explaining the basis of presentation, significant accounting policies, merger agreement details, fair value measurements, debt obligations, employee benefit plans, commitments and contingencies, other comprehensive income, and net income per share [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position at specific points in time Condensed Consolidated Balance Sheet Highlights (in millions) | Metric | June 15, 2024 | February 24, 2024 | | :----------------- | :------------ | :---------------- | | Total Assets | $26,077.0 | $26,221.1 | | Total Liabilities | $23,163.9 | $23,473.6 | | Total Stockholders' Equity | $2,913.1 | $2,747.5 | [Condensed Consolidated Statements of Operations and Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) This section details the company's financial performance, including revenue, expenses, and net income Condensed Consolidated Statements of Operations Highlights (16 weeks ended, in millions, except per share data) | Metric | June 15, 2024 | June 17, 2023 | | :------------------------- | :------------ | :------------ | | Net sales and other revenue | $24,265.4 | $24,050.2 | | Gross margin | $6,738.9 | $6,662.7 | | Operating income | $459.6 | $622.2 | | Net income | $240.7 | $417.2 | | Basic net income per Class A common share | $0.42 | $0.73 | | Diluted net income per Class A common share | $0.41 | $0.72 | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Highlights (16 weeks ended, in millions) | Metric | June 15, 2024 | June 17, 2023 | | :-------------------------------------------------------- | :------------ | :------------ | | Net cash provided by operating activities | $960.9 | $838.3 | | Net cash used in investing activities | $(538.0) | $(453.9) | | Net cash used in financing activities | $(320.8) | $(615.0) | | Cash and cash equivalents and restricted cash at end of period | $295.3 | $233.2 | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section presents changes in the company's equity over time, including net income and dividends Condensed Consolidated Statements of Stockholders' Equity Highlights (in millions) | Metric | June 15, 2024 | February 24, 2024 | | :------------------------------------ | :------------ | :---------------- | | Balance as of beginning of period | $2,747.5 | $1,610.7 | | Net income | $240.7 | $417.2 | | Cash dividends declared on common stock | $(69.5) | $(69.0) | | Other comprehensive loss (income), net of tax | $(1.3) | $1.1 | | Balance as of end of period | $2,913.1 | $2,000.0 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the condensed consolidated financial statements [NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=7&type=section&id=NOTE%201%20-%20BASIS%20OF%20PRESENTATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note describes the accounting principles and policies used in preparing the interim financial statements - Interim financial statements are unaudited and include normal recurring adjustments, not necessarily indicative of full-year results[18](index=18&type=chunk) - LIFO expense decreased to **$14.6 million** for the 16 weeks ended June 15, 2024, from **$34.0 million** for the same period in 2023[19](index=19&type=chunk) - The company realized a **$10.5 million gain** in the first quarter of fiscal 2023 from the repurchase of its 45% ownership interest in El Rancho[20](index=20&type=chunk) - The effective tax rate increased to **22.3%** for Q1 fiscal 2024 (**$69.2 million expense**) from **13.7%** for Q1 fiscal 2023 (**$66.1 million expense**), primarily due to a **$49.7 million reserve reduction** in Q1 fiscal 2023[22](index=22&type=chunk)[24](index=24&type=chunk) - The company operates **12 geographically based operating divisions**, reported as one segment due to similar economic characteristics and operations[25](index=25&type=chunk) Net Sales and Other Revenue by Product Type (16 weeks ended, in millions) | Product Type | June 15, 2024 Amount | % of Total | June 17, 2023 Amount | % of Total | | :------------------------ | :------------------- | :--------- | :------------------- | :--------- | | Non-perishables | $12,054.0 | 49.7% | $12,086.8 | 50.3% | | Fresh | $7,904.9 | 32.6% | $7,889.3 | 32.8% | | Pharmacy | $2,622.8 | 10.8% | $2,300.1 | 9.6% | | Fuel | $1,320.9 | 5.4% | $1,400.4 | 5.8% | | Other | $362.8 | 1.5% | $373.6 | 1.5% | | **Net sales and other revenue** | **$24,265.4** | **100.0%** | **$24,050.2** | **100.0%** | - The company is currently evaluating the impact of ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Tax Disclosures) on its financial statements[30](index=30&type=chunk)[31](index=31&type=chunk) [NOTE 2 - MERGER AGREEMENT](index=9&type=section&id=NOTE%202%20-%20MERGER%20AGREEMENT) This note details the terms and status of the merger agreement with The Kroger Co. and regulatory challenges - The merger agreement with The Kroger Co. was entered into on October 13, 2022, for **$34.10 per share in cash**, reduced by a **$6.85 Special Dividend** paid on January 20, 2023[32](index=32&type=chunk) - An amended divestiture plan with C&S Wholesale Grocers, LLC for select stores, banners, distribution centers, offices, and private label brands has been announced, eliminating the need for the previously contemplated SpinCo creation[34](index=34&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk) - The FTC instituted an administrative proceeding and filed a lawsuit for a preliminary injunction on February 26, 2024, with state attorneys general in Washington and Colorado also filing suits; a preliminary injunction hearing in the Federal Action is set for **August 26, 2024**[39](index=39&type=chunk) - The merger's outside date has been extended to **October 9, 2024**, with a **$600 million termination fee** if regulatory approval is the only outstanding closing condition[38](index=38&type=chunk) [NOTE 3 - FAIR VALUE MEASUREMENTS](index=10&type=section&id=NOTE%203%20-%20FAIR%20VALUE%20MEASUREMENTS) This note explains the valuation hierarchy and fair value of assets and liabilities, including debt - The company uses a **three-level valuation hierarchy** (Level 1, 2, 3) based on the transparency of inputs for fair value measurements[40](index=40&type=chunk) Assets Measured at Fair Value (June 15, 2024, in millions) | Asset Type | Total | Level 1 | Level 2 | Level 3 | | :-------------------- | :------ | :------ | :------ | :------ | | Short-term investments | $22.0 | $5.8 | $16.2 | $— | | Non-current investments | $107.4 | $6.7 | $100.7 | $— | | Derivative contracts | $1.0 | $— | $1.0 | $— | | **Total** | **$130.4** | **$12.5** | **$117.9** | **$—** | - As of June 15, 2024, the fair value of total debt was **$7,263.9 million** compared to a carrying value of **$7,484.0 million**[46](index=46&type=chunk) - Long-lived assets and goodwill are measured at fair value on a non-recurring basis for impairment evaluation, utilizing **Level 3 (unobservable) inputs**[48](index=48&type=chunk) [NOTE 4 - LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS](index=13&type=section&id=NOTE%204%20-%20LONG-TERM%20DEBT%20AND%20FINANCE%20LEASE%20OBLIGATIONS) This note details the company's long-term debt and finance lease obligations, including outstanding amounts Long-Term Debt and Finance Lease Obligations (in millions) | Metric | June 15, 2024 | February 24, 2024 | | :-------------------------------------------------------- | :------------ | :---------------- | | Senior Unsecured Notes due 2026 to 2030 | $6,509.7 | $6,506.4 | | New Albertsons L.P. Notes due 2026 to 2031 | $481.4 | $480.1 | | Safeway Inc. Notes due 2027 to 2031 | $375.5 | $375.4 | | ABL Facility | $— | $200.0 | | Other financing obligations | $29.8 | $29.9 | | Mortgage notes payable, secured | $16.4 | $16.4 | | Finance lease obligations | $444.6 | $460.4 | | **Total debt** | **$7,857.4** | **$8,068.6** | | Less current maturities | $(82.6) | $(285.2) | | **Long-term portion** | **$7,774.8** | **$7,783.4** | - The company repaid **$200.0 million** under the ABL Facility during the 16 weeks ended June 15, 2024, resulting in **no outstanding amounts** as of that date[51](index=51&type=chunk) [NOTE 5 - EMPLOYEE BENEFIT PLANS](index=14&type=section&id=NOTE%205%20-%20EMPLOYEE%20BENEFIT%20PLANS) This note outlines the components of net pension and post-retirement expense and company contributions Components of Net Pension and Post-Retirement Expense (Income) (16 weeks ended, in millions) | Component | June 15, 2024 | June 17, 2023 | | :--------------------------------- | :------------ | :------------ | | Estimated return on plan assets | $(28.1) | $(30.3) | | Service cost | $5.1 | $5.3 | | Interest cost | $25.9 | $25.7 | | Amortization of prior service cost | $0.1 | $0.1 | | Amortization of net actuarial gain | $(1.2) | $(0.6) | | **Pension Expense (Income), net** | **$1.8** | **$0.2** | | Other post-retirement benefits expense (income), net | $0.0 | $(0.1) | - The company contributed **$12.7 million** to its defined pension and post-retirement benefit plans during the 16 weeks ended June 15, 2024, and anticipates contributing an additional **$72.7 million** for the remainder of fiscal 2024[54](index=54&type=chunk) [NOTE 6 - COMMITMENTS AND CONTINGENCIES AND OFF BALANCE SHEET ARRANGEMENTS](index=14&type=section&id=NOTE%206%20-%20COMMITMENTS%20AND%20CONTINGENCIES%20AND%20OFF%20BALANCE%20SHEET%20ARRANGEMENTS) This note describes various legal claims, lawsuits, and potential liabilities the company faces - The company is subject to various claims and lawsuits, including class actions, but management believes any resulting liability will not have a **material adverse effect** on its financial condition[56](index=56&type=chunk) - Two False Claims Act (FCA) qui tam actions (Proctor v. Safeway and Schutte and Yarberry v. SuperValu) alleging overcharging federal healthcare programs were remanded by the U.S. Supreme Court in **June 2023**; the trial for Schutte is reset for **September 30, 2024**, with relators alleging damages exceeding **$100 million** before trebling[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk)[63](index=63&type=chunk) - The company is a defendant in Pharmacy Benefit Manager (PBM) litigation in Minnesota state court, challenging prescription-drug prices, with discovery ongoing and trial readiness scheduled for **September 29, 2025**[64](index=64&type=chunk)[65](index=65&type=chunk) - The company is named in approximately **85 Opioid lawsuits**; it settled cases in New Mexico and Nevada for **$21.5 million** (paid by insurers in FY2022), with three remaining state court claims in discovery and trials scheduled in **2025**[67](index=67&type=chunk)[68](index=68&type=chunk)[70](index=70&type=chunk) - The company has received subpoenas and requests for information from the DOJ and state Attorneys General regarding potential violations of the federal Controlled Substances Act and FCA[71](index=71&type=chunk) [NOTE 7 - OTHER COMPREHENSIVE INCOME OR LOSS](index=17&type=section&id=NOTE%207%20-%20OTHER%20COMPREHENSIVE%20INCOME%20OR%20LOSS) This note details the components of other comprehensive income or loss, primarily from benefit plans - Current-period other comprehensive loss, net of tax, was **$(1.3) million** for the 16 weeks ended June 15, 2024, primarily from pension and post-retirement benefit plans[74](index=74&type=chunk) - The ending Accumulated Other Comprehensive Income (AOCI) balance was **$86.7 million** as of June 15, 2024, compared to **$70.4 million** as of June 17, 2023[74](index=74&type=chunk)[76](index=76&type=chunk) [NOTE 8 - NET INCOME PER CLASS A COMMON SHARE](index=18&type=section&id=NOTE%208%20-%20NET%20INCOME%20PER%20CLASS%20A%20COMMON%20SHARE) This note presents the basic and diluted net income per Class A common share and related calculations Net Income Per Class A Common Share (16 weeks ended) | Metric | June 15, 2024 | June 17, 2023 | | :------------------------------------------ | :------------ | :------------ | | Basic net income per Class A common share | $0.42 | $0.73 | | Diluted net income per Class A common share | $0.41 | $0.72 | - Weighted average diluted Class A common shares outstanding were **581.3 million** for Q1 fiscal 2024, up from **580.1 million** for Q1 fiscal 2023[80](index=80&type=chunk) - As of June 17, 2023, all Convertible Preferred Stock had been converted into Class A common stock, eliminating its impact on per-share calculations for Q1 fiscal 2024[77](index=77&type=chunk) [Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&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 for the first quarter of fiscal 2024, including an overview of operations, key financial highlights, and a detailed comparison of results against the prior year. It also discusses forward-looking statements, non-GAAP financial measures, and liquidity and capital resources [FORWARD-LOOKING STATEMENTS AND FACTORS THAT IMPACT OUR OPERATING RESULTS AND TRENDS](index=19&type=section&id=FORWARD-LOOKING%20STATEMENTS%20AND%20FACTORS%20THAT%20IMPACT%20OUR%20OPERATING%20RESULTS%20AND%20TRENDS) This section discusses inherent risks and uncertainties affecting future operating results - Forward-looking statements are subject to numerous risks and uncertainties, including those related to the Kroger merger (e.g., closing ability, consumer confidence, employee retention, litigation)[83](index=83&type=chunk)[84](index=84&type=chunk) - Macroeconomic conditions such as food price inflation/deflation, fuel/commodity prices, and consumer behavior changes pose significant risks[84](index=84&type=chunk) - Operational risks include failure to achieve productivity initiatives, supply chain challenges, cyber incidents, and changes in wage rates or labor union contracts[84](index=84&type=chunk) [NON-GAAP FINANCIAL MEASURES](index=21&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) This section defines and explains the use of non-GAAP financial measures like EBITDA and Adjusted Net Income - EBITDA is defined as GAAP earnings (net loss) before interest, income taxes, depreciation, and amortization[87](index=87&type=chunk) - Adjusted EBITDA and Adjusted net income are non-GAAP measures that exclude items management does not consider in assessing ongoing core performance, used for evaluating operating performance and board/bank compliance[87](index=87&type=chunk)[89](index=89&type=chunk) - Non-GAAP measures should not be considered as discretionary cash available for business growth; the company primarily relies on GAAP results[90](index=90&type=chunk) [FIRST QUARTER OF FISCAL 2024 OVERVIEW](index=23&type=section&id=FIRST%20QUARTER%20OF%20FISCAL%202024%20OVERVIEW) This section provides an overview of the company's operational footprint and key financial and operating highlights - As of June 15, 2024, the company operated **2,269 stores**, **1,725 pharmacies**, **1,346 in-store coffee shops**, **403 fuel centers**, **22 distribution centers**, and **19 manufacturing facilities**[92](index=92&type=chunk) First Quarter Fiscal 2024 Financial and Operating Highlights | Metric | Value | | :------------------------------------ | :------------ | | Identical sales increase | 1.4% | | Digital sales increase | 23% | | Loyalty members | 41.4 million (up 15%) | | Net income | $241 million | | Net income per Class A common share | $0.41 | | Adjusted net income | $392 million | | Adjusted net income per Class A common share | $0.66 | | Adjusted EBITDA | $1,184 million| Store Count Changes (16 weeks ended) | Metric | June 15, 2024 | June 17, 2023 | | :------------------------ | :------------ | :------------ | | Stores, beginning of period | 2,269 | 2,271 | | Opened | 1 | 2 | | Closed | (1) | (1) | | **Stores, end of period** | **2,269** | **2,272** | [RESULTS OF OPERATIONS](index=24&type=section&id=RESULTS%20OF%20OPERATIONS) This section analyzes the company's financial performance, including sales, margins, expenses, and net income - Net sales and other revenue increased **0.9%** to **$24,265.4 million** for Q1 fiscal 2024, driven by a **1.4% increase in identical sales** (primarily pharmacy) and digital sales growth, partially offset by lower fuel sales[102](index=102&type=chunk) - Identical sales, excluding fuel, increased **1.4%** in Q1 fiscal 2024, compared to **4.9%** in Q1 fiscal 2023[104](index=104&type=chunk) - Gross margin rate increased to **27.8%** in Q1 fiscal 2024 (from **27.7%** in Q1 fiscal 2023); excluding fuel and LIFO, the rate decreased **22 basis points** due to higher pharmacy sales (lower margin), increased shrink, and higher digital costs, partially offset by productivity initiatives[106](index=106&type=chunk)[108](index=108&type=chunk) - Selling and administrative expenses increased to **25.9% of Net sales** in Q1 fiscal 2024 (from **25.0%** in Q1 fiscal 2023); excluding fuel, the rate increased **79 basis points**, primarily due to digital/omnichannel development, Merger-related costs, higher employee costs, increased occupancy, and third-party security[110](index=110&type=chunk) - Net income was **$240.7 million** (**$0.41 per share**) in Q1 fiscal 2024, down from **$417.2 million** (**$0.72 per share**) in Q1 fiscal 2023, which included a **$49.7 million tax benefit**[115](index=115&type=chunk)[116](index=116&type=chunk) - Adjusted EBITDA decreased to **$1,183.9 million** (**4.9% of Net sales**) in Q1 fiscal 2024 from **$1,318.5 million** (**5.5% of Net sales**) in Q1 fiscal 2023[117](index=117&type=chunk)[122](index=122&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=30&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses the company's cash flow activities, debt management, and available liquidity - Net cash provided by operating activities increased to **$960.9 million** in Q1 fiscal 2024 (from **$838.3 million** in Q1 fiscal 2023), driven by working capital changes (lower inventory) and less cash paid for taxes and interest, despite lower Adjusted EBITDA and higher Merger-related costs[129](index=129&type=chunk) - Net cash used in investing activities increased to **$538.0 million** in Q1 fiscal 2024 (from **$453.9 million** in Q1 fiscal 2023), primarily due to **$543.0 million** in payments for property, equipment, and intangibles, including 17 remodels, one new store, and digital/technology investments[130](index=130&type=chunk)[132](index=132&type=chunk) - Net cash used in financing activities decreased to **$320.8 million** in Q1 fiscal 2024 (from **$615.0 million** in Q1 fiscal 2023), mainly due to a **$200.0 million ABL Facility repayment** (vs. **$500.0 million** in prior year), dividends, and tax withholding[133](index=133&type=chunk) - The company paid **$69.5 million** (**$0.12 per share**) in cash dividends on Class A common stock in Q1 fiscal 2024 and announced the next quarterly dividend of **$0.12 per share** payable **August 9, 2024**[134](index=134&type=chunk) - The company believes it has significant liquidity sources (cash on hand, operating cash flows, ABL Facility) to meet its estimated **$5.1 billion** liquidity needs for the next 12 months, including working capital, merger costs, capital expenditures, and dividends[135](index=135&type=chunk) - As of June 15, 2024, there were **no borrowings outstanding** under the ABL Facility, with total availability of **$3,954.2 million**[136](index=136&type=chunk) [CRITICAL ACCOUNTING POLICIES](index=32&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) This section confirms no material changes to critical accounting policies from the prior annual report - There have been **no material changes** to the critical accounting policies from the Annual Report on Form 10-K for the fiscal year ended February 24, 2024[138](index=138&type=chunk) [RECENTLY ISSUED AND RECENTLY ADOPTED ACCOUNTING STANDARDS](index=33&type=section&id=RECENTLY%20ISSUED%20AND%20RECENTLY%20ADOPTED%20ACCOUNTING%20STANDARDS) This section refers to disclosures regarding new accounting standards in the financial statement notes - Information on recently issued and recently adopted accounting standards is provided in Note 1 to the unaudited interim Condensed Consolidated Financial Statements[139](index=139&type=chunk) [Item 3 - Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203%20-%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no material changes in the company's exposure to market risk since its last Annual Report on Form 10-K - **No material changes** in market risk exposure have occurred since the Annual Report on Form 10-K for the fiscal year ended February 24, 2024[140](index=140&type=chunk) [Item 4 - Controls and Procedures](index=29&type=section&id=Item%204%20-%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes in internal control over financial reporting during the first quarter of fiscal 2024 - The Principal Executive Officer and Principal Financial Officer concluded that disclosure controls and procedures were **effective** as of the end of the period covered by this Form 10-Q[141](index=141&type=chunk) - There were **no material changes** in internal control over financial reporting during the first quarter of fiscal 2024[142](index=142&type=chunk) [PART II - OTHER INFORMATION](index=34&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section provides additional information, including legal proceedings and risk factors [Item 1 - Legal Proceedings](index=34&type=section&id=Item%201%20-%20Legal%20Proceedings) This section reiterates that the company is involved in various legal claims and lawsuits, and management believes that any resulting liability will not have a material adverse effect on the business or financial condition. It also refers to Note 6 for more detailed information - The company is subject to various claims and lawsuits, including those involving trade practices, wage and hour laws, and real estate disputes, some of which may be class actions[144](index=144&type=chunk) - Management believes that any resulting liability from these legal matters will not have a **material adverse effect** on the company's business or overall financial condition[144](index=144&type=chunk) - The company continually evaluates its exposure to loss contingencies and makes provisions where probable and reasonably estimable, but outcomes involve **substantial uncertainties**[145](index=145&type=chunk) [Environmental Matters](index=34&type=section&id=Environmental%20Matters) This section addresses the company's compliance with environmental laws and potential contamination liabilities - The company's operations are subject to environmental laws regarding waste management, air emissions, and underground storage tanks[146](index=146&type=chunk) - As an owner and operator of commercial real estate, the company may be liable for contamination clean-up at its facilities[146](index=146&type=chunk) - A **$1 million threshold** is used for disclosing environmental proceedings that may result in monetary sanctions[146](index=146&type=chunk) [Item 1A - Risk Factors](index=34&type=section&id=Item%201A%20-%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - **No material changes** to the risk factors previously included in the Annual Report on Form 10-K for the fiscal year ended February 24, 2024[147](index=147&type=chunk) [Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202%20-%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports that there were no unregistered sales of equity securities or use of proceeds during the period - **No unregistered sales** of equity securities occurred[147](index=147&type=chunk) - **No use of proceeds** from unregistered sales of equity securities[147](index=147&type=chunk) [Item 3 - Defaults Upon Senior Securities](index=35&type=section&id=Item%203%20-%20Defaults%20Upon%20Senior%20Securities) This section reports that there were no defaults upon senior securities during the period - **No defaults** upon senior securities occurred[148](index=148&type=chunk) [Item 4 - Mine Safety Disclosures](index=35&type=section&id=Item%204%20-%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company - Mine Safety Disclosures are **not applicable**[148](index=148&type=chunk) [Item 5 - Other Information](index=35&type=section&id=Item%205%20-%20Other%20Information) This section reports that no directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the first quarter of fiscal 2024 - 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 in the first quarter of fiscal 2024[148](index=148&type=chunk) [Item 6 - Exhibits](index=35&type=section&id=Item%206%20-%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including various certifications and XBRL documents - Exhibits include certifications from the Principal Executive Officer and Principal Financial Officer (31.1, 31.2, 32.1) and various Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[148](index=148&type=chunk) [SIGNATURES](index=36&type=section&id=SIGNATURES) This section includes the official signatures of the company's principal executive and financial officers - The report was signed on **July 23, 2024**, by Vivek Sankaran, Chief Executive Officer and Director, and Sharon McCollam, President and Chief Financial Officer[150](index=150&type=chunk)

Sales Performance - Identical sales increased by 1.4% to $24.3 billion in Q1 FY2024 compared to $24.1 billion in Q1 FY2023[3] - Digital sales surged by 23% year-over-year, contributing to the overall sales growth[2] Income and Earnings - Net income for Q1 FY2024 was $240.7 million, or $0.41 per share, down from $417.2 million, or $0.72 per share in Q1 FY2023[7] - Adjusted net income decreased to $391.6 million, or $0.66 per share, compared to $545.7 million, or $0.93 per share in the prior year[7] - Net income for the 16 weeks ended June 15, 2024, was $240.7 million, down 42.3% from $417.2 million for the same period last year[26] - Adjusted net income for the 16 weeks ended June 15, 2024, was $391.6 million, down 28.3% from $545.7 million in the previous year[29] - Net income decreased from $1,446.5 million to $1,119.5 million year-over-year, a decline of approximately 22.6%[39] EBITDA and Margins - Adjusted EBITDA for Q1 FY2024 was $1,183.9 million, representing 4.9% of net sales, down from $1,318.5 million, or 5.5% in Q1 FY2023[7] - Adjusted EBITDA for the same period was $1,183.9 million, a decrease of 8.1% from $1,318.5 million year-over-year[31] - Adjusted EBITDA decreased from $4,575.2 million to $4,183.1 million year-over-year, a decline of approximately 8.6%[39] Expenses - Selling and administrative expenses rose to 25.9% of net sales in Q1 FY2024, up from 25.0% in Q1 FY2023, primarily due to increased operating expenses[5] - Selling and administrative expenses increased from $10.0 million to $12.4 million year-over-year[35] - Interest expense increased from $420.6 million to $482.9 million year-over-year[39] - Merger-related costs increased significantly from $97.5 million to $225.8 million year-over-year[39] Cash Flow and Assets - Net cash provided by operating activities increased to $960.9 million, compared to $838.3 million in the prior year, reflecting a growth of 14.6%[26] - Cash and cash equivalents at the end of the period increased to $295.3 million from $233.2 million, a rise of 26.6%[26] - Cash and cash equivalents increased from $225.2 million to $291.1 million year-over-year[38] Liabilities and Equity - Total current assets decreased to $6,207.9 million from $6,287.5 million, a decline of 1.3%[24] - Total liabilities decreased to $23,163.8 million from $23,473.1 million, a reduction of 1.3%[24] - Total stockholders' equity increased to $2,913.1 million from $2,747.5 million, an increase of 6.0%[24] - Total debt decreased from $8,399.2 million to $7,857.4 million year-over-year[38] - Payments on long-term borrowings decreased to $200.2 million from $500.2 million, a reduction of 60%[26] Other Financial Metrics - Gross margin rate increased to 27.8% in Q1 FY2024 from 27.7% in Q1 FY2023, although it decreased by 22 basis points when excluding fuel and LIFO expenses[4] - The company reported a net loss on property dispositions of $5.3 million in Q1 FY2024, significantly lower than $27.6 million in Q1 FY2023[5] - The company is facing headwinds in FY2024 related to investments in associate wages and benefits, and an increasing mix of lower-margin pharmacy and digital businesses[2] - Miscellaneous adjustments totaled $19.8 million compared to $(2.4) million in the previous year[35] - LIFO expense decreased from $239.9 million to $32.6 million year-over-year[39] - Total Net Debt Ratio increased slightly from 1.79 to 1.81 year-over-year[38]

Group 1 - Stocks that may benefit from a potential Trump presidency include major investment banks such as JPMorgan, Goldman Sachs, Morgan Stanley, and Bank of America, which experienced gains on Monday [2] - The Trump administration is expected to be more favorable towards mergers and acquisitions, potentially allowing deals like Kroger's acquisition of Albertsons and Tapestry's purchase of Capri, which were previously blocked by the Biden administration [2] - Companies focused on environmental sustainability, such as Enphase, SolarEdge, Sunrun, and Sunnova, may face challenges if government subsidies are removed, as these stocks were down by Monday's close [2] Group 2 - The sentiment in the market suggests that many investors are betting on stocks that could perform well under a Republican administration, particularly following recent political events [1] - The political landscape can significantly influence stock performance, with certain stocks being labeled as "Trump stocks" based on the current political climate [3]

Investors in Albertsons Companies, Inc. (ACI) need to pay close attention to the stock based on moves in the options market lately. That is because the Jan 17, 2025 $15 Call had some of the highest implied volatility of all equity options today.What is Implied Volatility?Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It coul ...

Real-time payments firm ACI Worldwide launched a collaboration with Brazil-based payments processor RS2.The partnership is designed to offer a one-stop solution for acquirers and issuers in Brazil, supporting financial institutions, integrated software vendors, payment facilitators, independent sales organizations and payment processors, according to a Tuesday (June 25) press release.“The combined new cloud-enabled technology platform enables merchants, banks and payment service providers to launch new prod ...

Group 1: Market Overview - The market has seen impressive gains, but not all stocks have benefited equally, with some stocks at 52-week lows presenting attractive risk-reward setups for rebound [1] - Short-term fundamentals for these stocks may be weak, but their long-term outlook remains strong, with earnings growth expected to improve materially in 2025 [1] - Companies can enhance stock value through strategies like increasing buybacks, making these stocks appealing for contrarian investors [1] Group 2: Intel (INTC) - Intel experienced an 80% return in 2023 but has since underperformed, currently being one of the poorest performers in the S&P 500 [2] - The company reported a $7 billion operating loss in its foundry business, with a break-even point now expected in 2027, which disappointed investors [2] - Intel aims to become a leading integrated device manufacturer, investing heavily in R&D and manufacturing to regain its competitive edge [3] - The U.S. government supports Intel's ambitions with $8.5 billion from the CHIPS Act and potential additional funding of $11 billion [3] - Management has announced $15 billion worth of business, indicating progress in its IDM 2.0 strategy [3] Group 3: Albertsons (ACI) - Albertsons is at a 52-week low despite a merger agreement with Kroger, which has faced regulatory challenges [4] - The FTC has sued to block the merger, but there is still a likelihood that it will close, especially after divestiture plans were announced [4][5] - Analysts upgraded Albertsons to "buy," citing increased probability of the merger closing, with potential upside of over 30% for shareholders [5] - ACI stock trades at 7 times forward adjusted EBITDA, indicating it is a bargain opportunity [5] Group 4: Yum China (YUMC) - Yum China is facing challenges due to a sluggish economic recovery in China, impacting consumer discretionary spending [6] - The company operates 15,022 restaurants and plans to expand to over 20,000 by 2026, supported by urbanization and a rising middle class [6] - There is significant growth potential in the $625 billion Chinese restaurant market, with chains accounting for only 18% of restaurant spending compared to 61% in the U.S. [6] - Yum China boasts restaurant margins exceeding 18% and plans to return over $3 billion to shareholders between 2024 and 2026 [7] - The stock is trading at 16 times forward earnings, making it another candidate for rebound [7]

Core Viewpoint - Albertsons Companies, Inc. is experiencing stable financial performance as an independent entity, despite a proposed merger with Kroger facing significant regulatory scrutiny and skepticism from the market [2][6][14] Financial Performance - Albertsons' revenue has grown by 32.8% since FY2016, comparable to Kroger's 30.1% and Walmart's 33.4% [4] - The operating margin for Albertsons in FY2023 is 3.0%, lower than Kroger's 3.3% and Walmart's 4.2%, but has shown good margin expansion [4][5] - Return on capital for Albertsons stands at 8.8%, above the consumer staples sector median of 6.8% [5] Merger with Kroger - Kroger's acquisition offer for Albertsons is priced at $34.1 per share, but the stock is currently trading 35% below this price, indicating market skepticism about the merger's success [6] - The FTC has filed to block the merger due to concerns over pricing power, with various stakeholders expressing opposition [6][14] - Kroger and Albertsons have agreed to sell 579 stores to C&S to improve merger prospects, but market sentiment remains cautious [6] Valuation - Albertsons trades at a forward normalized P/E of 8.1, significantly lower than Kroger's 11.7 and Walmart's 27.7, indicating a potential upside of 45% to 242% [7] - The DCF model estimates a fair value for Albertsons at $38.44, suggesting a 90% upside from the current stock price [9][14] Market Position - Despite the ongoing merger challenges, Albertsons continues to perform on par with other grocery chains, maintaining a stable operational profile [14] - The valuation gap compared to peers and the consumer staples sector indicates that Albertsons is undervalued, presenting a strong investment opportunity [7][14]

Core Insights - Rokt has partnered with Albertsons Media Collective to enhance customer engagement through non-endemic advertising, allowing brands not sold by Albertsons to reach its ecommerce customers [1][2][3] - The partnership aims to drive customer loyalty and improve the shopping experience by delivering relevant offers during the transaction moment, which is when customers are most likely to respond [2][3] - Albertsons will utilize Rokt's technology to expand its advertising capabilities across its own channels and Rokt's network of premium ecommerce merchants [3][4] Company Overview - Rokt is a leading ecommerce technology company that leverages machine learning and AI to enhance transaction relevance, processing over 5 billion transactions annually across various industries [4][5] - Albertsons Media Collective is a retail media network that connects with consumers in over 2,200 locations across 34 states, focusing on innovative marketing solutions and first-party data to drive retail sales [6]

Core Insights - Kimco Realty reported a net loss of $18.9 million, or $0.03 per diluted share, for Q1 2024, compared to a net income of $283.5 million, or $0.46 per diluted share, in Q1 2023, primarily due to a one-time special dividend received in the previous year [1][4][21] Financial Performance - Funds From Operations (FFO) for Q1 2024 was $261.8 million, or $0.39 per diluted share, including $25.2 million in merger-related charges [5][24] - Same Property Net Operating Income (NOI) grew by 3.9% year-over-year, driven by a 2.8% increase in minimum rent [2][7] - The company achieved a pro-rata portfolio occupancy of 96.0%, with anchor and small shop occupancy rates at 97.8% and 91.5%, respectively [2][7] Acquisition and Disposition Activities - Kimco completed the $2.3 billion acquisition of RPT Realty on January 2, 2024, and disposed of ten former RPT properties for $248 million, achieving its 2024 disposition target [2][3][8] - The acquisition of RPT resulted in a $60.6 million increase in consolidated revenues from rental properties [4] Capital Market Activities - The company repaid unsecured notes totaling $646.9 million during Q1 2024 and has no remaining unsecured debt [9] - Kimco sold 14.2 million shares of ACI common stock, generating $299.1 million in net proceeds [9] Dividend Declarations - The board declared a quarterly cash dividend of $0.24 per share, payable on June 20, 2024 [10] 2024 Full Year Outlook - The company updated its guidance for 2024, projecting net income of $0.40 to $0.44 per diluted share and FFO of $1.56 to $1.60 per diluted share [11][12]

Before considering which stocks to buy if inflation continues, it’s good to remember the relationship between inflation and interest rates. The latest reading on CPI and PPI shows that the declining inflation rate may be ramping back up.  The takeaway is that the Fed is less likely to lower interest rates, which puts pressure on equities. But while some stocks will struggle, others are built to shine during rising inflation. These are the companies that deliver the products and services that consumers need ...