Albertsons Companies Reports Second Quarter Results
Albertsons Companies, Inc. today reported results for the second quarter of fiscal 2020, which ended Sept. 12, 2020.
Second Quarter of Fiscal 2020 Highlights
- Identical sales growth of 13.8 percent
- Digital sales growth of 243 percent
- Diluted net income per share of $0.49; Adjusted net income per share of $0.60
- Net income of $284.5 million
- Adjusted EBITDA of $948.4 million, an increase of 67 percent compared to the second quarter last year
- Debt refinancing and paydown transactions to deliver approximately $52 million in annualized interest savings
“We continue to successfully execute against our strategic priorities, which translated into outstanding second quarter results. We have a value proposition that is resonating with customers and driving market share gains across all of our markets,” said Vivek Sankaran, President and CEO. “We are in the early stages of a transformation to become a modern, growing food retailer providing a wide assortment of high quality fresh and essential goods to customers, and we remain well-positioned to generate differentiated performance and deliver an excellent shopping experience.”
Second Quarter of Fiscal 2020 Results
Sales and other revenue increased 11.2 percent to $15.8 billion during the 12 weeks ended Sept. 12, 2020 (“second quarter of fiscal 2020”) compared to $14.2 billion during the 12 weeks ended Sept. 7, 2019 (“second quarter of fiscal 2019”). The increase was driven by the Company’s 13.8 percent increase in identical sales, partially offset by lower fuel sales. Identical sales benefited from the company’s 243 percent growth in digital sales and an increase in store sales.
Gross profit margin increased to 29.0 percent during the second quarter of fiscal 2020 compared to 27.8 percent during the second quarter of fiscal 2019. Excluding the impact of fuel, gross profit margin increased 85 basis points compared to the second quarter of fiscal 2019. The increase in gross profit margin was primarily driven by continued improvements in shrink expense and sales leverage on advertising and supply chain costs. Gross profit margin also benefited from sales mix shifts.
Selling and administrative expenses decreased to 25.6 percent of sales during the second quarter of fiscal 2020 compared to 26.8 percent of sales for the second quarter of fiscal 2019. Excluding the impact of fuel, selling and administrative expenses as a percentage of sales decreased 175 basis points. The decrease in selling and administrative expenses was primarily attributable to sales leverage driven by higher identical sales, partially offset by incremental Covid-19 costs related to supporting and protecting our associates and customers.
Gain on property dispositions and impairment losses, net was $18.3 million during the second quarter of fiscal 2020 compared to $435.5 million during the second quarter of fiscal 2019. The gain during the second quarter of fiscal 2019 was related to sale leaseback transactions.
Interest expense was $128.6 million during the second quarter of fiscal 2020 compared to $177.5 million during the second 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 second quarter of fiscal 2020 was 6 percent compared to 6.4 percent during the second quarter of fiscal 2019, excluding amortization and write-off of deferred financing costs and original issue discount.
Income tax expense was $111.2 million during the second quarter of fiscal 2020 compared to $81.9 million during the second quarter of fiscal 2019. The increase in income tax expense is primarily the result of incurring certain nondeductible transaction-related costs in the second quarter of fiscal 2020 and the increase in income before taxes.
Net income was $284.5 million during the second quarter of fiscal 2020 compared to $294.8 million during the second quarter of fiscal 2019. Net income for the second quarter of fiscal 2019 included the benefit of gains related to sale leaseback transactions.
Adjusted net income was $356.4 million, or $0.60 per share, during the second quarter of fiscal 2020 compared to $99.2 million, or $0.17 per share, during the second quarter of fiscal 2019.
Adjusted EBITDA was $948.4 million, or 6 percent of sales, during the second quarter of fiscal 2020 compared to $567.6 million, or 4 percent of sales, during the second quarter of fiscal 2019. The increase in Adjusted EBITDA was primarily attributable to the Company’s 13.8 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.