Grocery retailer Albertsons (NYSE: ACI) met Wall Streets revenue expectations in Q3 CY2025, with sales up 2% year on year to $18.92 billion. Its non-GAAP profit of $0.44 per share was 10.6% above analysts’ consensus estimates.
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Albertsons (ACI) Q3 CY2025 Highlights:
- Revenue: $18.92 billion vs analyst estimates of $18.88 billion (2% year-on-year growth, in line)
- Adjusted EPS: $0.44 vs analyst estimates of $0.40 (10.6% beat)
- Adjusted EBITDA: $848.4 million vs analyst estimates of $825 million (4.5% margin, 2.8% beat)
- Adjusted EPS guidance for the full year is $2.12 at the midpoint, missing analyst estimates by 1.2%
- EBITDA guidance for the full year is $3.85 billion at the midpoint, in line with analyst expectations
- Operating Margin: 1.6%, in line with the same quarter last year
- Free Cash Flow Margin: 0.9%, similar to the same quarter last year
- Locations: 2,257 at quarter end, down from 2,267 in the same quarter last year
- Same-Store Sales rose 2.2% year on year, in line with the same quarter last year
- Market Capitalization: $9.4 billion
"In the third quarter, we delivered solid results and continued to advance our strategic priorities," said Susan Morris, Chief Executive Officer.
Company Overview
With over 20 well-known grocery banners spanning 34 states, Albertsons (NYSE: ACI) operates food and drug retail stores across the US, offering groceries, pharmacy services, and own-brand products under banners like Safeway, Jewel-Osco, and Vons.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years.
With $81.37 billion in revenue over the past 12 months, Albertsons is a behemoth in the consumer retail sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices. However, its scale is a double-edged sword because it’s harder to find incremental growth when you’ve penetrated most of the market. For Albertsons to boost its sales, it likely needs to adjust its prices or lean into foreign markets.
As you can see below, Albertsons’s 2.6% annualized revenue growth over the last three years was sluggish as its store footprint remained unchanged.
This quarter, Albertsons grew its revenue by 2% year on year, and its $18.92 billion of revenue was in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 3.5% over the next 12 months, similar to its three-year rate. This projection is above average for the sector and suggests its newer products will help maintain its historical top-line performance.
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Store Performance
Number of Stores
Albertsons operated 2,257 locations in the latest quarter, and over the last two years, has kept its store count flat while other consumer retail businesses have opted for growth.
When a retailer keeps its store footprint steady, it usually means demand is stable and it’s focusing on operational efficiency to increase profitability.
Same-Store Sales
A company's store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales provides a deeper understanding of this issue because it measures organic growth at brick-and-mortar shops for at least a year.
Albertsons’s demand rose over the last two years and slightly outpaced the industry. On average, the company’s same-store sales have grown by 2.1% per year. Given its flat store base over the same period, this performance stems from not only increased foot traffic at existing locations but also higher e-commerce sales as demand shifts from in-store to online.
In the latest quarter, Albertsons’s same-store sales rose 2.2% year on year. This performance was more or less in line with its historical levels.
Key Takeaways from Albertsons’s Q3 Results
It was encouraging to see Albertsons beat analysts’ EBITDA expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its gross margin slightly missed. Overall, this print had some key positives. The stock remained flat at $17.14 immediately after reporting.
Is Albertsons an attractive investment opportunity right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.
