Albertsons Companies, Inc. Reports Third Quarter Fiscal 2020 Results
Albertsons Companies, Inc. recently reported results for the third quarter of fiscal 2020, which ended Dec. 5, 2020.
Third Quarter of Fiscal 2020 Highlights
- Identical sales growth of 12.3 percent
- Digital sales growth of 225 percent
- Net income per share of $0.20; Adjusted net income per share of $0.66
- Net income of $124 million; Adjusted net income of $387 million
- Adjusted EBITDA of $968 million, an increase of 53 percent compared to the third quarter last year
- Executed debt refinancing and announced paydown to drive an additional $25 million in annualized interest savings
“Our constant focus on our customers continued to drive strong growth and market share gains in the third quarter,” said Vivek Sankaran, President & CEO. “It is clear that our strategy is working, and as we continue to execute on our strategic priorities, we believe we are well positioned to deliver sustainable growth over the long term. At the same time, we remain focused on delivering value to all stakeholders, including taking care of our customers, associates and the communities we serve as we continue to navigate through the pandemic.”
Third Quarter of Fiscal 2020 Results
Sales and other revenue was $15.4 billion during the 12 weeks ended Dec. 5, 2020 (“third quarter of fiscal 2020”) compared to $14.1 billion during the 12 weeks ended Nov. 30, 2019 (“third quarter of fiscal 2019”). The increase was driven by the Company’s 12.3 percent growth in identical sales, partially offset by lower fuel sales. Identical sales benefited from the Company’s 225 percent growth in digital sales.
Gross profit margin increased to 29.3 percent during the third quarter of fiscal 2020 compared to 28.3 percent during the third quarter of fiscal 2019. Excluding the impact of fuel, gross profit margin increased 25 basis points. The increase was primarily driven by continued improvements in shrink expense and sales leverage on advertising and supply chain costs, partially offset by expenses related to our growth in digital sales and select investments in price.
Selling and administrative expenses were 28 percent of sales during the third quarter of fiscal 2020 compared to 27 percent of sales for the third quarter of fiscal 2019. Excluding the impact of fuel, selling and administrative expenses as a percentage of sales increased 40 basis points. The increase in selling and administrative expenses was primarily attributable to the $285.7 million charge (pre-tax) related to the previously announced withdrawal from the United Food and Commercial Workers International Union (“UFCW”) Union-Industry Pension Fund (“National Fund”) and incremental Covid-19 expenses to safeguard associates and customers, partially offset by sales leverage driven by higher identical sales and continued focus on cost control.
Gain on property dispositions and impairment losses, net was $59 million during the third quarter of fiscal 2020 compared to $18.7 million during the third quarter of fiscal 2019.
Interest expense was $115.9 million during the third quarter of fiscal 2020 compared to $154.8 million during the third quarter of fiscal 2019. The decrease in interest expense was primarily attributable to lower average outstanding borrowings and lower average interest rates. The weighted average interest rate during the third quarter of fiscal 2020 was 5.5 percent compared to 6.3 percent during the third quarter of fiscal 2019, excluding amortization and write-off of deferred financing costs and original issue discount.
Income tax expense was $29.5 million, representing a 19.3 percent effective tax rate, during the third quarter of fiscal 2020 compared to $12.9 million, representing a 19.1 percent effective tax rate, during the third quarter of fiscal 2019. The increase in income tax expense was primarily the result of the increase in income before taxes. The effective income tax rate for the third quarter of fiscal 2020 was favorably impacted by discrete benefits related to income tax credits and equity-based compensation deductions.
Net income was $123.7 million during the third quarter of fiscal 2020 compared to $54.8 million during the third quarter of fiscal 2019. Net income during the third quarter of fiscal 2020 included the $213 million charge, net of tax, related to the UFCW National Fund withdrawal.
Adjusted net income was $386.6 million, or $0.66 per share, during the third quarter of fiscal 2020 compared to $142.2 million, or $0.24 per share, during the third quarter of fiscal 2019.
Adjusted EBITDA was $967.7 million, or 6.3 percent of sales, during the third quarter of fiscal 2020 compared to $634.4 million, or 4.5 percent of sales, during the third quarter of fiscal 2019. The increase in Adjusted EBITDA was primarily attributable to the Company’s 12.3 percent increase in identical sales and the improved sales leverage experienced in gross margin and selling and administrative expenses, excluding the adjustment items.