Albertsons Eyes Higher Wages, Tougher Consumer Backdrop

Grocer Awaits Regulatory Approval for Its $24.6 Billion Acquisition by Kroger
An Albertsons supermarket in Las Vegas, Nev.
An Albertsons supermarket in Las Vegas, Nev. (Bridget Bennett/Bloomberg News)

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Albertsons Cos. is anticipating higher labor costs and “a more difficult consumer environment” in a new sign of caution from big U.S. retailers.

The economic backdrop “is likely to be more challenging later in the year,” the grocer said in a statement April 11 as it reported earnings. Albertsons said it’s also expecting to pay higher wages while contending with new inflationary cost increases.

The wary tone pointed to muted expectations as the company works to win regulatory approval for its $24.6 billion acquisition by Kroger Co. Citing the pending deal, Albertsons didn’t provide a profit and sales forecast for the fiscal year, which ends in early 2024. But its emphasis on the uncertain economic environment echoed comments earlier this year by Walmart Inc. and Target Corp.

Albertsons is still benefiting as high U.S. inflation forces shoppers to spend more on essentials. In the fiscal fourth quarter, adjusted earnings rose to 79 cents a share, topping the 68-cent average of analyst estimates compiled by Bloomberg. Sales climbed 5.1% to $18.3 billion, while analysts had predicted $18.1 billion.


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A 5.6% gain in comparable sales topped the 4.3% increase projected by analysts. But the company’s gross margin, a broad measure of profitability, fell almost a percentage point to 27.8%, pointing to cost pressures. Wall Street had estimated 28.4%.

The shares fell 1.4% in early morning trading in New York. Albertsons advanced 2.3% this year through April 10, while a Russell 1000 index of consumer-staples companies fell 1.1%.

Albertsons ranks No. 40 on the Transport Topics Top 100 list of the largest private carriers in North America and No. 5 among top grocery carriers

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