Albertsons Q3 profit declines despite higher sales and digital gains

Core Insights - Albertsons Companies reported increased sales and strong digital growth in Q3 of fiscal 2025, but net income declined compared to the previous year [1][2] Financial Performance - Net income for Q3 2025 was $293.3 million, or $0.55 per share, down from $400.6 million, or $0.69 per share, in Q3 2024 [1] - Adjusted net income reached $390.3 million, or $0.72 per share, compared to $420.3 million, or $0.71 per share, a year earlier [1] - Operating income decreased to $489.7 million from $518.5 million in the same period last year [2] Revenue Growth - Net sales and other revenue rose 1.9% year on year to $19.12 billion, driven by higher pharmacy sales and growth in identical sales [2] - Identical sales increased by 2.4% during the quarter, while digital sales advanced by 21% [3] - Loyalty membership grew by 12% to 49.8 million [3] Profitability Metrics - Adjusted EBITDA totaled $1.03 billion, equivalent to 5.4% of net sales and other revenue [3] - Gross margin declined to 27.4% from 27.9% a year earlier, due to higher delivery and handling costs and a larger contribution from lower-margin pharmacy sales [4] Expenses and Outlook - Selling and administrative expenses fell to 24.9% of net sales and other revenue, compared to 25.1% in the prior-year quarter [4] - Net interest expense increased to $116 million from $109 million, and income tax expense rose to $84.4 million [5] - The company narrowed its fiscal 2025 outlook, forecasting identical sales growth of 2.2% to 2.5% and adjusted EBITDA of $3.82 billion to $3.87 billion [5] Strategic Initiatives - The company continues to project an effective income tax rate of 23% to 24% and capital expenditure of $1.8 billion to $1.9 billion for the financial year [6] - CEO Susan Morris highlighted that investments in technology and AI are reshaping operations and enhancing customer service [6]