Albertsons Stock Rises on Earnings. What’s Driving Sharp Digital Sales Gains.

Albertsons boosted its fiscal-year outlook after posting adjusted earnings and sales that topped analysts’ expectations. (Shelby Tauber/Bloomberg)

Key Points

• Albertsons reported strong fiscal second-quarter earnings, with total sales reaching $18.92 billion and digital sales surging 23%.
• The company raised its fiscal-year adjusted earnings guidance to $2.06 to $2.19 per share, exceeding analyst expectations.
• Albertsons announced a $750 million stock repurchase and expanded its share buyback program to $2.75 billion.

Albertsons shares spiked on Tuesday after the grocery chain posted strong fiscal second-quarter earnings. Investments in technology appear to be paying off.

Digital sales surged 23%, helping bring total sales to $18.92 billion, up from $18.55 billion in the prior year and above the $18.89 billion analysts had forecast, according to FactSet.

Other metrics came in above expectations, including adjusted earnings of 44 cents a share, which beat the 40 cents a share Wall Street had anticipated.

Albertsons also hiked its fiscal-year adjusted earnings guidance to a range of $2.06 to $2.19 a share, up from $2.03 to $2.16 a share previously. Analysts polled by FactSet had expected $2.11 a share.

The solid print boosted the stock 12% to $19.02. Stocks were mostly in the red on Tuesday, with the benchmark S&P 500 slipping 0.2%.

Digital sales were a notable growth driver for Albertsons. The company has achieved a 24% compound annual growth rate in e-commerce over the last three fiscal years, CEO Susan Morris noted on the earnings call.

“We’re not only selling food,” Morris told investors. “We’re simplifying meal planning, making shopping easier and more convenient. We are serving our customers how, when, and where they want to be served.”

The grocer’s digital presence spans four platforms, which Morris described as “key engines for customer acquisition, retention, and engagement.”

There is also the Albertsons Media Collective, a digital advertising platform for consumer packaged goods brands, that launched in 2021 and has steadily continued to expand. Data from sources such as the Albertsons loyalty platform fuel the Media Collective’s targeting capabilities and monetization strategies, Morris said.

At points during the call, management emphasized technology, including its cloud-based centralized data and investments in AI-powered features to drive customer retention.

It only goes to show how e-commerce is essential for the grocery chain, which has sought to strengthen its identity following a failed merger attempt with Kroger in 2024.

Regulators blocked the deal on antitrust grounds, forcing Albertsons to terminate the agreement. Since then, the rival grocers have been entrapped in a legal battle, with each blaming the other for the merger’s failure.

Albertsons sued Kroger in December of last year; Kroger, a much larger competitor by market capitalization, has since filed counterclaims.

These troubles have weighed on Albertsons stock, in addition to the grocery chain’s soft outlook for fiscal 2025 and lasting concerns about competitive pressure.

Shares are down 3.5% this year. Rival Kroger, by comparison, has gained 12.2%, in line with the S&P 500 index, which is up 12.6%.

Albertsons said Tuesday it agreed to repurchase $750 million worth of company stock and planned to expand its share buyback program from $2 billion to $2.75 billion.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com