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Core Insights - Albertsons Companies, Inc. (ACI) reported mixed fourth-quarter fiscal 2023 results, with earnings in line with estimates but sales missing expectations [1][3] - The company's top line saw a marginal year-over-year increase, while the bottom line declined [1] - ACI's strategy focuses on operational excellence, digital expansion, pharmacy operations, and customer relationships to drive growth [1] Financial Performance - Adjusted quarterly earnings were 54 cents per share, a decline of 31.6% from 79 cents in the prior-year period [3] - Net sales and other revenues reached $18,339.5 million, up 0.4% year over year, but missed the consensus estimate of $18,401 million [3] - Identical sales rose by 1%, driven by strong pharmacy sales, although this was partially offset by declines in fuel sales and wholesale revenues [3] Profitability Metrics - Gross profit was $5,144.2 million, an increase of 1.2% year over year, with gross margin expanding by 20 basis points to 28.0% [3] - Excluding fuel and LIFO expenses, gross margin decreased by 58 basis points year over year due to lower margins in pharmacy operations and increased shrink [4] - Selling and administrative expenses decreased by 0.1% to $4,717.2 million, with the expense rate declining by 10 basis points to 25.7% of net sales [4][5] Operational Challenges - Adjusted EBITDA declined by 12.8% year over year to $915.8 million, with the adjusted EBITDA margin contracting by 100 basis points [5] - Higher operating expenses related to digital and omni-channel development, merger-related costs, and increased store occupancy costs contributed to the challenges [5] Balance Sheet Overview - As of February 24, 2024, ACI had cash and cash equivalents of $188.7 million, long-term debt and finance lease obligations totaling $7,783.4 million, and total stockholders' equity of $2,747.5 million [6]

Core Viewpoint - Kroger and Albertsons are increasing the number of grocery stores sold to C&S Wholesale Grocers to address federal regulators' concerns regarding their proposed $25 billion merger, now involving the sale of an additional 166 stores [1][2]. Group 1: Updated Divestiture Agreement - The updated divestiture agreement will see C&S pay approximately $2.9 billion in cash for the stores, an increase from the original $1.9 billion payout [1]. - The new agreement will result in C&S acquiring a total of 579 stores, along with access to the Albertsons Signature and O Organics private label brands [1]. Group 2: Regulatory and Employment Commitments - Kroger's CEO emphasized that the updated plan ensures no store closures due to the merger, all frontline associates will remain employed, and existing collective bargaining agreements will continue [2][4]. - The agreement aims to maintain industry-leading healthcare and pension benefits for associates, alongside bargained-for wages [4]. Group 3: C&S Wholesale Grocers' Perspective - C&S Wholesale Grocers' CEO expressed confidence that the expanded divestiture package will provide the necessary resources for the stores to continue serving their communities effectively [4]. - C&S looks forward to integrating storied banners, quality private label brands, and experienced retail associates into its operations [4]. Group 4: Legal and Market Concerns - The Federal Trade Commission (FTC) and eight states have filed a lawsuit to block the merger, citing concerns over potential price increases, store closures, and job losses in the grocery market [6]. - Union representatives have raised concerns about C&S's ability to maintain store operations without adequate IT infrastructure and customer loyalty [8].

As ongoing financial challenges have grocery shoppers more cautious about their purchasing, many are seeking out digital rewards. In its fourth quarter and full year fiscal 2023 financial results, Albertsons Companies shared that increases in digital engagement led its growth, with identical sales up only 1% year over year in Q4 but digital sales up 24%. Central to this growth was the chain’s loyalty program, which saw its membership grow by 16% to nearly 40 million.“We delivered another solid quarter amids ...

Core Insights - Albertsons and Kroger are divesting more locations to secure regulatory approval for Kroger's $24.6 billion acquisition of Albertsons [1] - The revised divestiture agreement with C&S Wholesale Grocers includes the sale of 160 additional locations, bringing the total to 579 [1] - The Federal Trade Commission (FTC) previously deemed the initial divestiture plan inadequate [1] Financial Performance - Albertsons reported fourth-quarter adjusted earnings per share (EPS) of $0.54, surpassing estimates [1] - Revenue for Albertsons increased by 0.4% to $18.34 billion, which fell short of forecasts [1] - CEO Vivek Sankaran indicated that the company faces ongoing challenges, including rising associate wages, prior year food inflation, and declining COVID-related income [1] Market Reaction - Albertsons shares declined by 0.4% to $20.26, with a nearly 12% drop year-to-date [1] - Kroger shares remained stable but have increased by approximately 24% in 2024 [1]

Core Insights - Albertsons Companies, Inc. reported revenue of $18.34 billion for the quarter ended February 2024, reflecting a year-over-year increase of 0.4% [1] - The earnings per share (EPS) for the same period was $0.54, down from $0.79 a year ago [1] - The reported revenue was slightly below the Zacks Consensus Estimate of $18.4 billion, resulting in a surprise of -0.33% [1] - The company did not deliver an EPS surprise, as the consensus EPS estimate was also $0.54 [1] Key Performance Metrics - Same-store sales increased by 1%, matching the four-analyst average estimate of 1% [2] - The number of stores at the end of the quarter was 2,269, slightly below the average estimate of 2,271 from three analysts [2] - Total retail square footage was 112.8 million, compared to the average estimate of 112.9 million based on two analysts [2] - Revenue from fuel sales was $822.80 million, below the average estimate of $902.34 million from two analysts [2] Stock Performance - Shares of Albertsons Companies have returned -2.6% over the past month, compared to a -4% change in the Zacks S&P 500 composite [2] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [2]

Key PointsAlbertsons reported mixed results with better-than-expected earnings, highlighting its value. The stock has a relatively high yield, paying 2.35%, compared to Kroger, which yields less.An updated merger agreement may be enough to get the merger deal through, but it doesn't matter; Albertsons is a good buy. 5 stocks we like better than Albertsons CompaniesAlbertson’s Companies NYSE: ACI proposed takeover by Kroger NYSE: KR may or may not go through, but it doesn’t matter. Either way, this stock is ...

Albertsons Companies Inc (NYSE: ACI) is trading down in premarket on Monday even though it reported better-than-expected financial results for its fiscal fourth quarter. Are you looking for signals & alerts from pro-traders? Sign-up to Invezz Signals™ for FREE. Takes 2 mins.Why is Albertsons stock down today?Copy link to sectionThe price action is interesting also because the retail chain saw its digital sales went up 24% on a year-over-year basis in Q4.  Albertsons ended the quarter with 39.8 million loyal ...

Part I [Business Overview](index=9&type=section&id=Item%201%20-%20Business) Albertsons is a leading U.S. food and drug retailer operating 2,269 stores under more than 20 banners, focusing on a "Locally Great, Nationally Strong" strategy - The company's loyalty program has grown to **39.8 million members**, and its digital sales increased by **22%** in fiscal 2023, highlighting the success of its omnichannel strategy[36](index=36&type=chunk)[191](index=191&type=chunk) - Own Brands, such as Signature SELECT® and O Organics®, are a key part of the business, generating **$16.5 billion** in sales in fiscal 2023 with over 14,000 unique items[30](index=30&type=chunk) - The company faces intense competition from a wide range of retailers, including supercenters, club stores, online retailers, and specialty supermarkets, with key competitive factors being location, price, quality, and convenience[49](index=49&type=chunk)[51](index=51&type=chunk) Company Scale and Operations (as of Feb 24, 2024) | Metric | Value | | :--- | :--- | | Stores | 2,269 across 34 states and DC | | Banners | Over 20 (e.g., Albertsons, Safeway, Vons) | | Market Position | 1 or 2 in 70% of 121 MSAs | | Pharmacies | 1,725 | | Fuel Centers | 402 | | Distribution Centers | 22 | | Manufacturing Facilities | 19 | | Employees | Approx. 285,000 | [Risk Factors](index=15&type=section&id=Item%201A%20-%20Risk%20Factors) The company identifies several material risks, with significant focus on the pending merger with Kroger, including uncertainties about its completion, potential negative impacts on business relationships, and litigation - Significant risks are associated with the pending merger with The Kroger Co., including the ability to close the transaction, potential distraction of management, difficulties in retaining employees, and litigation, with the FTC having filed a lawsuit to enjoin the merger[73](index=73&type=chunk)[76](index=76&type=chunk)[79](index=79&type=chunk) - The food and drug retail industry is intensely competitive, and failure to compete on price, quality, and convenience, or to respond to consumer trends and the growth of online channels, could adversely affect profitability[82](index=82&type=chunk)[83](index=83&type=chunk)[88](index=88&type=chunk) - A significant majority of the workforce (approx. **200,000 employees**) is unionized, posing financial risks from potential labor disputes, work stoppages, and increased pension expenses, with an estimated allocable share of multiemployer plan underfunding of **$4.5 billion**[105](index=105&type=chunk)[106](index=106&type=chunk)[110](index=110&type=chunk) - The company is dependent on IT systems and faces cybersecurity risks, including data breaches and incidents involving customer or employee data, which could lead to financial loss and reputational damage, with the use of AI also presenting emerging risks[130](index=130&type=chunk)[132](index=132&type=chunk)[138](index=138&type=chunk) - As of February 24, 2024, the company had approximately **$7.7 billion** of debt outstanding, and this high level of indebtedness could increase vulnerability to adverse economic conditions and limit operational flexibility[141](index=141&type=chunk)[149](index=149&type=chunk) [Cybersecurity](index=32&type=section&id=Item%201C%20-%20Cybersecurity) The company has established a comprehensive cybersecurity risk management program, overseen by the Board's Audit and Risk Committee and Technology Committee, focusing on proactive threat identification, continuous monitoring, and incident response - Cybersecurity oversight is handled at the board level by the Audit and Risk Committee and the Technology Committee, with the CISO reporting to the Chief Technology and Transformation Officer[166](index=166&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk) - The risk management strategy includes continuous monitoring, regular risk assessments of internal systems and third-party suppliers, and annual tabletop exercises to test the incident response plan[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk) - As of the report date, no cybersecurity threats have been identified that have materially affected or are reasonably anticipated to materially affect the company[170](index=170&type=chunk) [Properties](index=34&type=section&id=Item%202%20-%20Properties) As of February 24, 2024, the company operated 2,269 stores across 34 states and the District of Columbia, with California having the highest number of stores and over half of the stores being larger than 50,000 square feet - The company owns or ground-leases **39%** of its operating stores and **53%** of its industrial properties (distribution centers and manufacturing plants)[174](index=174&type=chunk) Store Count by Top 5 States (as of Feb 24, 2024) | State | Number of Stores | | :--- | :--- | | California | 586 | | Washington | 215 | | Texas | 208 | | Illinois | 183 | | Arizona | 135 | Store Size Distribution (as of Feb 24, 2024) | Square Footage | Number of Stores | Percent of Total | | :--- | :--- | :--- | | Less than 30,000 | 217 | 9.6% | | 30,000 to 50,000 | 778 | 34.3% | | More than 50,000 | 1,274 | 56.1% | [Legal Proceedings](index=34&type=section&id=Item%203%20-%20Legal%20Proceedings) The company is involved in various legal proceedings arising in the ordinary course of business, including matters related to trade practices, employment, product claims, and significant ongoing litigation such as False Claims Act cases and opioid epidemic lawsuits - The company is defending two significant False Claims Act (FCA) lawsuits (Proctor and Schutte) concerning pharmacy pricing, which allege damages over **$100 million** each before trebling, with the Supreme Court ruling adversely on a key legal issue and cases remanded for further proceedings[474](index=474&type=chunk)[477](index=477&type=chunk)[478](index=478&type=chunk) - The company is a defendant in approximately **85 lawsuits** filed by various government entities and hospitals related to the national opioid epidemic, and while some cases have been settled, the outcome and potential loss for the remaining matters are currently indeterminable[484](index=484&type=chunk)[485](index=485&type=chunk) - A class action lawsuit in Oregon regarding meat promotions was settled for **$107 million**, which was paid in September 2023[488](index=488&type=chunk) Part II [Stockholder Matters](index=36&type=section&id=Item%205%20-%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's Class A common stock trades on the NYSE under the symbol "ACI", and the report includes a performance graph comparing ACI's stock return to relevant indices since its IPO in June 2020 - The company's Class A common stock (ACI) has been trading on the NYSE since June 26, 2020[180](index=180&type=chunk) - No shares of common stock were repurchased during fiscal 2023 or 2022, and as of February 24, 2024, **$180.9 million** remained available under the authorized share repurchase program[183](index=183&type=chunk) - All remaining Convertible Preferred Stock was converted into Class A common stock during fiscal 2023, completing the conversion of all originally issued shares[184](index=184&type=chunk) [Management's Discussion and Analysis (MD&A)](index=38&type=section&id=Item%207%20-%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In fiscal 2023, Net Sales and Other Revenue increased **2.0%** to **$79.2 billion**, driven by a **3.0%** increase in identical sales, primarily from pharmacy and digital sales growth, though Net Income and Adjusted EBITDA declined due to lower gross margin, higher interest expense, and merger-related costs - The **3.0%** increase in identical sales was primarily driven by growth in pharmacy sales and a **22%** increase in digital sales[191](index=191&type=chunk)[202](index=202&type=chunk) - Gross margin rate decreased by **20 basis points**, or **64 basis points** excluding fuel and LIFO, mainly due to pharmacy operations mix, higher shrink, and increased digital picking/delivery costs[208](index=208&type=chunk) - Net cash from operating activities decreased to **$2.7 billion** in fiscal 2023 from **$2.9 billion** in fiscal 2022, due to lower Adjusted EBITDA and higher cash payments for taxes, merger costs, and interest[226](index=226&type=chunk) - Capital expenditures for fiscal 2024 are expected to be between **$2.0 billion** and **$2.1 billion**[228](index=228&type=chunk) Fiscal 2023 Key Financial Results (vs. Fiscal 2022) | Metric | Fiscal 2023 | Fiscal 2022 | Change | | :--- | :--- | :--- | :--- | | Net Sales & Other Revenue | $79.2B | $77.6B | +2.0% | | Identical Sales Increase | 3.0% | 6.9% | (3.9) p.p. | | Gross Margin Rate | 27.8% | 28.0% | (0.2) p.p. | | Operating Income | $2.1B | $2.3B | (10.3)% | | Net Income | $1.3B | $1.5B | (14.4)% | | Adjusted EBITDA | $4.3B | $4.7B | (7.7)% | | Diluted EPS | $2.23 | $2.27 | (1.8)% | | Adjusted Diluted EPS | $2.88 | $3.37 | (14.5)% | [Market Risk Disclosures](index=52&type=section&id=Item%207A%20-%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from changes in interest rates and energy prices, with interest rate risk primarily relating to its variable-rate ABL Facility, and energy price risk managed through fixed-price contracts and short-term derivatives - The primary interest rate exposure is from the ABL Facility, and a hypothetical **100 basis point** increase in variable interest rates would increase annual interest expense by about **$2 million**[259](index=259&type=chunk) - The company uses fixed-price contracts and short-term derivatives to manage exposure to price fluctuations in electricity, natural gas, and diesel fuel[261](index=261&type=chunk) Debt Maturity Profile (as of Feb 24, 2024) | Debt Type | Total Principal | Fair Value | | :--- | :--- | :--- | | Fixed Rate Debt | $7,484.2M | $7,257.2M | | Variable Rate Debt | $200.0M | $200.0M | [Financial Statements and Supplementary Data](index=54&type=section&id=Item%208%20-%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the company's audited consolidated financial statements for the fiscal year ended February 24, 2024, and the unqualified report from the independent registered public accounting firm, Deloitte & Touche LLP, on both the financial statements and the effectiveness of internal control over financial reporting - The independent auditor, Deloitte & Touche LLP, issued an unqualified opinion on the financial statements and the effectiveness of internal control over financial reporting[264](index=264&type=chunk)[274](index=274&type=chunk) - The auditor identified self-insurance liabilities for general liability and workers' compensation as a Critical Audit Matter due to the significant estimation and judgment involved[270](index=270&type=chunk)[271](index=271&type=chunk) - The pending merger with Kroger is subject to regulatory clearance, with the FTC and several states having filed lawsuits to block the transaction, and the merger agreement's outside date can be extended to October 9, 2024[343](index=343&type=chunk)[349](index=349&type=chunk)[350](index=350&type=chunk) - As of Feb 24, 2024, total debt, including finance leases, was **$8.1 billion**, and the company has a **$4.0 billion** ABL facility, of which **$3.75 billion** was available[231](index=231&type=chunk)[364](index=364&type=chunk)[367](index=367&type=chunk) Consolidated Balance Sheet Summary (as of Feb 24, 2024) | Account | Value (in millions) | | :--- | :--- | | Total Assets | $26,221.1 | | Total Liabilities | $23,473.6 | | Total Stockholders' Equity | $2,747.5 | Part III [Directors, Executive Compensation, and Corporate Governance](index=105&type=section&id=Items%2010%2C%2011%2C%2012%2C%2013%20and%2014) Information regarding directors, executive officers, corporate governance, executive compensation, security ownership, and principal accountant fees and services is incorporated by reference from the company's definitive proxy statement for its 2024 Annual Meeting of Stockholders, to be filed with the SEC within 120 days after the fiscal year-end - Information for Items 10 through 14 is incorporated by reference from the company's forthcoming 2024 Proxy Statement[5](index=5&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=106&type=section&id=Item%2015%20-%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed as part of the Form 10-K, including the Merger Agreement with Kroger, corporate governance documents, debt indentures, material contracts, and certifications by the CEO and CFO - This section provides a comprehensive list of all exhibits filed with the 10-K, including the Agreement and Plan of Merger with The Kroger Co[514](index=514&type=chunk) - Certifications by the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act are included as exhibits[519](index=519&type=chunk)

Albertsons Companies, Inc. Reports Fourth Quarter and Full Year Results Boise, ID - April 22, 2024 Albertsons Companies, Inc. (NYSE: ACI) (the "Company") today reported results for the fourth quarter of fiscal 2023 and full year fiscal 2023, which ended February 24, 2024. Fourth Quarter of Fiscal 2023 Highlights • Identical sales increased 1.0% • Digital sales increased 24% • Loyalty members increased 16% to 39.8 million • Net income of $251 million, or $0.43 per share • Adjusted net income of $318 million, ...