Group 1 - The DividendRank formula ranks Albertsons Companies Inc (ACI) in the top 25% of dividend stocks, indicating strong fundamentals and attractive valuation for investors [1] - ACI shares entered oversold territory with a Relative Strength Index (RSI) of 29.6, below the threshold of 30, suggesting potential buying opportunities as the average RSI for dividend stocks is 47.8 [2] - ACI's annualized dividend is $0.48 per share, translating to an annual yield of 2.34% based on a recent share price of $20.54, making it appealing for dividend investors [2] Group 2 - The recent heavy selling of ACI shares may be exhausting, presenting a potential entry point for bullish investors [3] - Investors are encouraged to examine ACI's dividend history to assess the likelihood of continued dividend payments [3]

Core Viewpoint - UBS has released a list of preferred stocks in the consumer sector, selecting seven stocks with differentiated investment value based on unique data sources. Group 1: Recommended Stocks - **PepsiCo (PEP.US)** is expected to show significant improvement potential over the next 12 to 18 months, with a projected high single-digit growth in earnings per share for the full year of 2026, making its risk-reward ratio highly attractive among the recommended stocks [1]. - **J.M. Smucker (SJM.US)** is forecasted to achieve an organic growth rate of 5.6%, slightly above the market expectation of 5.5%, driven by strong pricing power in its coffee segment and cost-saving measures [1]. - **Albertsons (ACI.US)** is viewed as having excessive stock price correction, with its pharmacy business achieving double-digit growth for 15 consecutive quarters, indicating strong customer lifetime value [2]. - **Dutch Bros (BROS.US)** is expected to continue its upward trajectory, supported by leading store expansion and sales growth momentum projected to last until mid-2026 [2][3]. - **Ulta Beauty (ULTA.US)** is showing strong execution under new leadership, with improved operational efficiency and a favorable competitive environment, which is expected to support its growth momentum [3]. - **On Running (ONON.US)** is focusing on product innovation and maintaining a premium brand position, which is anticipated to lead to industry-leading sales growth and profit margin improvements [3]. - **Peloton (PTON.US)** is rated as a "buy" with a target price of $11, supported by revenue growth and cost optimization, alongside a positive trend in core metrics [4].

Group 1: Consumer Sector Recommendations - UBS has released a list of preferred stocks in the consumer sector, identifying seven stocks with differentiated investment value [1] - PepsiCo (PEP.US) is expected to show significant improvement potential over the next 12 to 18 months, with a projected high single-digit growth in earnings per share for 2026 [1] - J.M. Smucker (SJM.US) is forecasted to achieve an organic growth rate of 5.6%, supported by strong pricing power in its coffee segment, which is above the market expectation of 5.5% [1] - Albertsons (ACI.US) has seen its stock price decline excessively, with its pharmacy business achieving double-digit growth for 15 consecutive quarters, indicating strong customer value [1] Group 2: Growth Potential in Coffee and Beauty Sectors - Dutch Bros (BROS.US) is anticipated to continue its sales and customer traffic growth, with a projected revenue increase of over 20% driven by strong brand recognition and competitive new products [2] - Ulta Beauty (ULTA.US) is expected to maintain its growth momentum under new leadership, with improved operational efficiency and a favorable competitive environment, leading to upward revisions in profit expectations for fiscal year 2024 [2] Group 3: Sports and Fitness Industry Insights - On (ONON.US) is focusing on product innovation and direct-to-consumer expansion, which is expected to lead to industry-leading sales growth and improved profit margins [3] - Peloton (PTON.US) is rated as a 'buy' with a target price of $11, supported by revenue growth and cost optimization, with a key focus on improving subscription user growth despite potential pricing risks [4]

Corporate Changes - Albertsons announced the retirement of Chair of the Board Jim Donald, who has been with the company since 2019 and served as the sole independent chair since October 2024 [1][2] - Kim Fennebresque, an independent director since 2015, has been elected as Donald's successor [1] - Other board changes include the appointment of David Zinsner, CFO of Intel Corporation, as an independent director, and the retirement of Allen Gibson, who has been on the board since 2018 [4] Strategic Focus - Fennebresque emphasized that David Zinsner's expertise in finance, technology, and AI will be crucial for Albertsons' future strategy, which will focus on technological and digital improvements [5] - The board changes occur as Albertsons seeks stability following the collapse of its merger plan with Kroger at the end of the previous year [5] Internal Developments - Since the beginning of the year, Albertsons has experienced several internal changes, including executive turnover, corporate layoffs, store closures, divisional restructuring, and the introduction of a new merchandising strategy [6]

Core Viewpoint - Albertsons Companies, Inc. has announced changes to its board of directors, indicating a strategic shift in governance and potential implications for company direction and performance [1] Group 1: Board Changes - The company has appointed new members to its board, which may enhance its governance structure and strategic oversight [1] - The changes are part of a broader initiative to strengthen leadership and align with the company's long-term goals [1] Group 2: Strategic Implications - The board changes could signal a renewed focus on operational efficiency and market competitiveness [1] - Investors may view these changes as a positive step towards improving shareholder value and addressing market challenges [1]

Company Overview - Safeway, a subsidiary of Albertsons Companies, is planning to close 12 stores across the United States, primarily in Colorado, Nebraska, and New Mexico [1][2] - The company currently operates over 900 stores nationwide [1] Store Closures - Ten of the closures will occur in Colorado, with one store each in Nebraska and New Mexico [1] - The closures are attributed to store performance, indicating a strategic decision based on operational evaluations [2] Industry Trends - Retail store closures are part of a broader trend referred to as the "retail apocalypse," affecting various retailers including grocery chains [3][4] - Other grocery retailers, such as Kroger, are also reducing their brick-and-mortar presence, with Kroger announcing plans to close 60 stores by mid-2026 [4]

Group 1 - The grocery sector is facing challenges from inflation, recession, and tariffs, yet Albertsons has achieved an 800% increase in its enhanced e-commerce website [1] - The market has not recognized Albertsons' breakthrough performance, despite it being a sound rationale for investment [1] Group 2 - Howard Jay Klein has extensive experience in major casino operations and is a value investor focused on management quality [1] - Klein leads The House Edge investing group, providing actionable research for the casino, online betting, and entertainment industries [1] - His intelligence network spans various levels within the US gambling and entertainment sectors, from customer-facing employees to senior management [1]

Core Insights - The North Texas Food Bank (NTFB) received a $3 million multi-year grant from the Albertsons and Tom Thumb Foundation to support its Fulfilling Futures strategic plan aimed at addressing food insecurity [1][2] - The Fulfilling Futures initiative is a five-year plan focused on providing meals and improving long-term well-being through expanded partnerships and wrap-around services [2] - The Nourishing Neighbors Innovation Spark Grant will fund the Hope for Tomorrow program, which offers services beyond food, including job training and healthcare access [2] Funding and Support - Albertsons and Tom Thumb have a long-standing partnership with NTFB, having supported the organization for over 40 years and donated nearly 2.5 million pounds of food last year [3][4] - The Southern Division of Albertsons and Tom Thumb has more than doubled its food donations to NTFB since 2021, alongside financial contributions and employee volunteer hours [4] Urgency of Need - Over 774,000 people in North Texas face food insecurity, with one in five children affected; Texas has nearly 5.4 million residents experiencing food insecurity [5] - Dallas-Fort Worth ranks No. 1 in hunger among Texas metro areas and No. 3 nationally, highlighting the critical need for food assistance [5] Organizational Overview - NTFB is a leading nonprofit organization dedicated to fighting hunger and providing access to nutritious food, delivering over 137 million meals annually [7] - The organization focuses on not only addressing hunger but also on nutrition education and advocating for policies that tackle the root causes of food insecurity [7][8]

[PART I - FINANCIAL INFORMATION](index=3&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 the 16-week period ended June 14, 2025, including balance sheets, income, cash flows, and equity statements with detailed notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased slightly to $26.47 billion as of June 14, 2025, primarily due to reduced cash, while total liabilities were $23.25 billion and equity declined to $3.22 billion Condensed Consolidated Balance Sheet Highlights (in millions) | Account | June 14, 2025 | February 22, 2025 | | :--- | :--- | :--- | | **Total Assets** | **$26,469.8** | **$26,755.7** | | Cash and cash equivalents | $151.0 | $293.6 | | Total current assets | $6,416.9 | $6,559.0 | | **Total Liabilities** | **$23,245.5** | **$23,369.8** | | Total current liabilities | $7,867.9 | $7,251.0 | | Long-term debt and finance lease obligations | $7,005.6 | $7,762.5 | | **Total Stockholders' Equity** | **$3,224.3** | **$3,385.9** | [Condensed Consolidated Statements of Operations and Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) Net sales increased to $24.88 billion for the 16 weeks ended June 14, 2025, while net income slightly decreased to $236.4 million, and diluted EPS remained flat at $0.41 Q1 2025 vs Q1 2024 Statement of Operations (in millions, except per share data) | Metric | 16 weeks ended June 14, 2025 | 16 weeks ended June 15, 2024 | | :--- | :--- | :--- | | Net sales and other revenue | $24,880.8 | $24,265.4 | | Gross margin | $6,738.3 | $6,738.9 | | Operating income | $449.3 | $459.6 | | Net income | $236.4 | $240.7 | | Diluted net income per Class A common share | $0.41 | $0.41 | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations decreased to $754.4 million, with significant cash used in investing ($474.1 million) and financing ($422.9 million), leading to a $142.6 million net decrease in cash Cash Flow Summary (in millions) | Cash Flow Activity | 16 weeks ended June 14, 2025 | 16 weeks ended June 15, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $754.4 | $960.9 | | Net cash used in investing activities | ($474.1) | ($538.0) | | Net cash used in financing activities | ($422.9) | ($320.8) | | Net (decrease) increase in cash | ($142.6) | $102.1 | - Significant financing activities in Q1 2025 included **$314.8 million** for treasury stock purchases and **$85.7 million** for dividend payments[12](index=12&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity decreased from $3.39 billion to $3.22 billion, primarily due to $314.8 million in stock repurchases and $85.7 million in dividends, partially offset by net income - The company repurchased **14,249,535 shares** of common stock for **$314.8 million** during the quarter[14](index=14&type=chunk) - Cash dividends of **$0.15 per common share** were declared, totaling **$85.7 million**[14](index=14&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, revenue disaggregation, debt, and legal contingencies, including pharmacy revenue growth, Kroger merger litigation, and ongoing False Claims Act, PBM, and Opioid lawsuits Disaggregated Revenues by Product Type (in millions) | Product Type | Q1 2025 Amount | Q1 2025 % of Total | Q1 2024 Amount | Q1 2024 % of Total | | :--- | :--- | :--- | :--- | :--- | | Non-perishables | $12,141.7 | 48.8% | $12,054.0 | 49.7% | | Fresh | $7,986.8 | 32.1% | $7,904.9 | 32.6% | | Pharmacy | $3,155.0 | 12.7% | $2,622.8 | 10.8% | | Fuel | $1,229.9 | 4.9% | $1,320.9 | 5.4% | | Other | $367.4 | 1.5% | $362.8 | 1.5% | - On December 10, 2024, the company terminated its merger agreement with Kroger and subsequently filed a lawsuit against Kroger for willful breach of the agreement, seeking damages and a **$600 million** termination fee[61](index=61&type=chunk)[62](index=62&type=chunk) - The company is defending against multiple significant legal actions, including two False Claims Act cases, PBM litigation, and numerous Opioid-related lawsuits. Estimated liabilities have been recorded for some of these matters[46](index=46&type=chunk)[53](index=53&type=chunk)[56](index=56&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) Management discusses Q1 2025 performance, highlighting 2.8% identical sales growth, 25% digital sales surge, and loyalty program expansion, alongside a decline in Adjusted EBITDA to $1.11 billion due to strategic investments and sales mix shifts Q1 2025 Key Performance Indicators | Metric | Q1 2025 | Change (YoY) | | :--- | :--- | :--- | | Identical sales (ex-fuel) | 2.8% | +1.4 p.p. | | Digital sales | 25% | N/A | | Loyalty members | 47.3 million | +14% | Q1 2025 vs Q1 2024 Financial Summary (in millions, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Sales and Other Revenue | $24,880.8 | $24,265.4 | | Net Income | $236.4 | $240.7 | | Adjusted Net Income | $318.9 | $391.6 | | Adjusted EBITDA | $1,111.0 | $1,183.9 | | Diluted EPS | $0.41 | $0.41 | | Adjusted Diluted EPS | $0.55 | $0.66 | - The company continued to execute its "Customers for Life" strategy, focusing on digital engagement, customer value, technology modernization, and productivity[91](index=91&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Net sales increased 2.5% to $24.88 billion, driven by identical sales growth and pharmacy, while gross margin rate decreased by 70 basis points, and selling and administrative expenses improved due to lower merger costs - The **2.5% increase** in Net sales and other revenue was primarily driven by a **2.8% increase** in identical sales, with strong growth in pharmacy sales being a key contributor[100](index=100&type=chunk) - Gross margin rate, excluding fuel and LIFO, decreased by **85 basis points** due to investments in customer value, a sales mix shift to pharmacy, and higher digital sales costs[104](index=104&type=chunk) - Selling and administrative expenses as a percentage of sales decreased by **50 basis points**, largely attributable to lower Merger-related costs, which were **$19.0 million** in Q1 2025 compared to **$92.3 million** in Q1 2024[105](index=105&type=chunk)[72](index=72&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains sufficient liquidity, with $754.4 million in operating cash flow, $585 million in capital expenditures, and returned $314.8 million via repurchases and $85.7 million in dividends, while managing debt through new note issuance - The company estimates liquidity needs of approximately **$5.5 billion** over the next 12 months for working capital, capital expenditures, debt service, and shareholder returns[128](index=128&type=chunk) - During Q1 2025, the company repurchased **14.2 million shares** of common stock for **$314.8 million**[127](index=127&type=chunk) - The company issued **$600.0 million** of **6.250%** senior unsecured notes due 2033 to redeem **$600.0 million** of **7.500%** notes due 2026[125](index=125&type=chunk) [Item 3 - Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203%20-%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in market risk exposure were reported compared to the prior fiscal year's Annual Report on Form 10-K - No material changes in market risk exposure were reported for the quarter[131](index=131&type=chunk) [Item 4 - Controls and Procedures](index=31&type=section&id=Item%204%20-%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed effective by management, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures are effective[132](index=132&type=chunk) - No material changes in internal control over financial reporting were identified during the quarter[133](index=133&type=chunk) [PART II - OTHER INFORMATION](index=32&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1 - Legal Proceedings](index=32&type=section&id=Item%201%20-%20Legal%20Proceedings) This section refers to Note 5 for details on legal proceedings, with management asserting no expected material adverse effect on business or financial condition - The company is subject to various claims and lawsuits arising in the ordinary course of business. For detailed information, the report refers to Note 5 of the Condensed Consolidated Financial Statements[135](index=135&type=chunk) [Item 1A - Risk Factors](index=32&type=section&id=Item%201A%20-%20Risk%20Factors) No material changes to previously disclosed risk factors were reported since the Annual Report on Form 10-K - No material changes to risk factors were reported since the last annual report filed on April 21, 2025[138](index=138&type=chunk) [Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202%20-%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity sales occurred; the company repurchased 14.2 million shares for $314.8 million under its $2.0 billion program, with $1.6 billion remaining Share Repurchase Activity - Q1 2025 | Metric | Value | | :--- | :--- | | Total Shares Purchased | 14,249,535 | | Average Price Paid per Share | $21.93 | | Total Cost (in millions) | $314.8 | | Remaining Authorization (in millions) | $1,604.9 | [Item 3 - Defaults Upon Senior Securities](index=33&type=section&id=Item%203%20-%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported during the period - None[143](index=143&type=chunk) [Item 4 - Mine Safety Disclosures](index=33&type=section&id=Item%204%20-%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not Applicable[144](index=144&type=chunk) [Item 5 - Other Information](index=33&type=section&id=Item%205%20-%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025 - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q1 2025[145](index=145&type=chunk) [Item 6 - Exhibits](index=33&type=section&id=Item%206%20-%20Exhibits) This section lists exhibits filed with the Form 10-Q, including retention stock agreements, officer certifications, and Inline XBRL financial data files - Exhibits filed include officer certifications under Sarbanes-Oxley Sections 302 and 906, and Inline XBRL documents[146](index=146&type=chunk)

Core Insights - Albertsons Companies experienced a 25% increase in digital sales for the quarter ending June 14, significantly outpacing the 2.8% increase in identical sales [2] - The company's loyalty program membership grew by 14%, reaching a total of 47 million members [5] Digital Sales and Engagement - The growth in digital sales has increased eCommerce's share of total grocery revenue to 9% during the quarter, attributed to improvements in customer service and the mobile app [3] - Ongoing investments in strategic priorities have driven increased engagement across digital platforms, including enhancements like artificial intelligence and interactive features for customer communication [4] Loyalty Program - The loyalty program has been simplified and enhanced, leading to increased member engagement and spending [5] - Members are utilizing more features of the program, resulting in more frequent interactions with the company [5] Future Outlook - The company views eCommerce as a significant growth opportunity for customer acquisition and retention beyond 2025, despite current penetration being below industry peers [4] - The eCommerce business is nearing breakeven in terms of profitability, indicating potential for future growth [4]