Albertsons Companies, Inc. ACI posted adjusted earnings of 48 cents a share for the fourth quarter of fiscal 2025, up from 46 cents a year ago. The results topped the Zacks Consensus Estimate of 43 cents, representing an 11.63% surprise.
Net sales and other revenues rose 7.7% year over year to $20,252.2 million but missed the consensus mark of $20,467 million by 1.05%. The quarter included continued momentum in digital, with digital sales up 16% and loyalty members up 12% to 51.2 million.
Pharmacy Headwinds Weigh on ACI’s Identical Sales
Top-line results reflected stronger-than-expected pharmacy pressure tied to the Inflation Reduction Act (“IRA”) and a mix shift within the broader pharmacy industry. Management said that pharmacy created an approximate 145-basis-point headwind to identical sales in the quarter, as IRA pricing and mix pressure accelerated and GLP-1 growth moderated more than expected.
Even with those pressures, ACI delivered identical sales growth of 0.7% and pointed to ongoing productivity as a key offset. The company also emphasized a more personalized retail model, with technology and AI investments centered on four long-term priorities: digital customer experience, merchandising intelligence, labor optimization and supply-chain optimization.
Digital, Loyalty Trends Stay Strong at ACI
Digital continued to be a core growth engine in the fourth quarter. Management highlighted that digital penetration surpassed 10% and noted that first-party business represented nearly 90% of the company’s 16% digital growth for the quarter. ACI also said that it fulfilled more than half of digital orders in under three hours, supported by its store-based fulfillment model.
Loyalty trends remained constructive, with membership growing to 51.2 million in the quarter. Management framed loyalty as a “flywheel,” supporting more personalized promotions and helping strengthen the company’s retail media platform. ACI said that its personalized ad pilots delivered a 90% lift in conversion and click-through rates, reinforcing its plans to scale more targeted advertising across customer journeys.
Albertsons Companies, Inc. Price, Consensus and EPS Surprise
Albertsons Companies, Inc. price-consensus-eps-surprise-chart | Albertsons Companies, Inc. Quote
A Sneak Peek Into ACI’s Margins & Expenses
The gross margin rate was 27.2% in the fourth quarter of fiscal 2025 versus 27.4% in the year-ago period. Excluding fuel and LIFO, the company said that the gross margin rate declined 25 basis points year over year, primarily due to higher delivery and handling costs associated with digital growth, partially offset by improved pharmacy gross margins related to IRA changes.
Selling and administrative expenses increased 390 basis points to 29.6% of net sales, largely reflecting the impact of the opioid settlement charge recorded during the quarter. However, excluding this charge and fuel impacts, selling and administrative expenses as a percentage of sales decreased two basis points, reflecting disciplined cost management and productivity gains.
Adjusted EBITDA increased 5.6% year over year to $903.4 million, while the adjusted EBITDA margin was 4.5%.
ACI’s Capital Allocation and Balance Sheet
Albertsons increased its quarterly dividend by 13% to 17 cents a share (an annualized 68 cents) and raised its remaining share repurchase authorization to a total of $2 billion. Management said that it expects to complete share repurchases opportunistically over approximately the next three years, and the fiscal 2026 outlook includes about $600 million of repurchases.
Balance sheet and cash flow metrics remained central to the company’s capital return narrative. ACI ended fiscal 2025 with cash and cash equivalents of $198.6 million and long-term debt and finance lease obligations of $8,412.6 million. Net debt to adjusted EBITDA was 2.24X at year-end. For fiscal 2025, net cash provided by operating activities was $2,366.7 million, and capital expenditures were $1,839.4 million, reflecting 94 store remodels, the opening of nine stores and continued investments in digital and technology platforms.
Albertsons’ Fiscal 2026 Outlook
For fiscal 2026, Albertsons guided adjusted EBITDA between $3.850 billion and $3.925 billion. It projected adjusted earnings in the band of $2.22-$2.32 per share compared with $2.18 reported in fiscal 2025.
ACI expects Identical sales to be flat to up 1%. Excluding the estimated 150-basis-point headwind from the IRA’s Medicare Drug Price Negotiation Program, management said the underlying growth rate would be about 1.5% to 2.5%. Management also expects first-quarter identical sales to remain below the full-year range due to the continued impact of the IRA and egg deflation. However, sales trends are projected to improve sequentially through the rest of the year.
Capital expenditures are expected in the $2-$2.2 billion range as ACI accelerates investment in store modernization and AI-powered capabilities.
The company reiterated its focus on scaling a $2 billion, three-year productivity program and expects gross margin in fiscal 2026 to be flat to slightly better, with productivity and favorable IRA-related pharmacy margin effects helping offset digital mix pressure.
Shares of this Zacks Rank #4 (Sell) company have fallen 5.6% over the past month compared with the industry’s decline of 6.4%.
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Darling Ingredients Inc. DAR develops, produces and sells sustainable natural ingredients. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Darling Ingredients’ current financial-year sales and earnings indicates growth of 6% and 391.2%, respectively, from the prior-year reported levels. DAR delivered an earnings surprise of 48.8% in the last reported quarter.
Ross Stores, Inc. ROST, a leading off-price apparel and home fashion chain, currently carries a Zacks Rank #2 (Buy). ROST has an average trailing four-quarter earnings surprise of 6.2%.
The Zacks Consensus Estimate for Ross Stores’ current financial-year sales and EPS suggests growth of 6.3% and 10.1%, respectively, from the year-ago reported numbers.
Deckers Outdoor Corporation DECK, which designs, markets and distributes footwear, apparel and accessories, currently carries a Zacks Rank #2 at present.
The Zacks Consensus Estimate for Deckers’ current financial-year sales and EPS suggests growth of 8.9% and 8.5%, respectively, from the year-ago reported numbers. DECK delivered a trailing four-quarter earnings surprise of 36.9%, on average.
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