Albertsons Companies Reports First Quarter Results
Albertsons Companies today reported results for the first quarter of fiscal 2020, which ended June 20, 2020.
First Quarter of Fiscal 2020 Highlights
Identical sales growth of 26.5 percent
Digital sales growth of 276 percent
Diluted net income per share of $1.00; Adjusted net income per share of $1.35
Net income of $586 million
Adjusted EBITDA of $1.7 billion, an increase of 93 percent compared to the first quarter last year
Covid-19 related investments of approximately $615 million to support and protect our front-line associates and customers, including more than $275 million in appreciation pay and $53 million for hunger relief in our communities
“I am inspired by the many ways my colleagues continue to step up to serve our customers and help our communities around the country during this time of need,” said Vivek Sankaran, President and CEO. “Their hard work and dedication have also allowed us to successfully navigate this extraordinary environment and we have accelerated our digital and eCommerce strategy to adapt to market conditions. We generated strong financial performance in the first quarter, including robust cash flow and enhanced liquidity, which support our continued investment to benefit our associates, customers, communities and stockholders.”
First Quarter of Fiscal 2020 Results
Sales and other revenue increased 21.4 percent to $22.8 billion during the 16 weeks ended June 20, 2020 (“first quarter of fiscal 2020”) compared to $18.7 billion during the 16 weeks ended June 15, 2019 (“first quarter of fiscal 2019”). The increase was driven by the Company’s 26.5 percent increase in identical sales, partially offset by a reduction in sales related to store closures and lower fuel sales. Identical sales benefited from our 276 percent growth in digital sales and an increase in store sales, both largely driven by the Covid-19 pandemic.
Gross profit margin increased to 29.8 percent during the first quarter of fiscal 2020 compared to 28.0 percent during the first quarter of fiscal 2019. Excluding the impact of fuel, gross profit margin increased 80 basis points compared to the first quarter of fiscal 2019, primarily due to a reduction in shrink expense as a percent of sales. Gross profit margin also benefited from lower promotional activity during most of the first quarter of fiscal 2020 before promotional activity started to increase in the last week of May and throughout June.
Selling and administrative expenses decreased to 25.4 percent of sales during the first quarter of fiscal 2020 compared to 26.4 percent of sales for the first quarter of fiscal 2019. Excluding the impact of fuel, selling and administrative expenses as a percentage of sales decreased 190 basis points. The decrease in selling and administrative expenses was primarily attributable to sales leverage driven by significantly higher identical sales. The improved selling and administrative rate included the Company’s incremental Covid-19 investments, including more than $275 million in appreciation pay to front-line associates and the Company’s $53 million contribution to hunger relief and other investments related to supporting and protecting our associates and customers. In addition, the Company incurred incremental expenses related to the civil disruption in certain of our markets in late May and June.
Interest expense was $180.6 million during the first quarter of fiscal 2020 compared to $225.2 million during the first 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 first quarter of fiscal 2020 was 6.0 percent compared to 6.5 percent during the first quarter of fiscal 2019, excluding amortization and write-off of deferred financing costs and original issue discount.
Income tax expense was $201.9 million during the first quarter of fiscal 2020 compared to income tax expense of $15.7 million during the first quarter of fiscal 2019. The increase in income tax expense is the result of the increase in income before taxes.
Net income was $586.2 million during the first quarter of fiscal 2020 compared to net income of $49.0 million during the first quarter of fiscal 2019.
Adjusted EBITDA was $1,691.0 million, or 7.4 percent of sales, during the first quarter of fiscal 2020 compared to $876.8 million, or 4.7 percent of sales, during the first quarter of fiscal 2019. The increase in Adjusted EBITDA was primarily attributable to the Company’s 26.5 percent increase in identical sales and the improved sales leverage experienced in gross margin and selling and administrative expenses.
For more information, visit the company’s official press release.