Albertsons expanding ecommerce operations

Date : 25 October 2017

We review Albertsons’ second quarter results, including its strong ecommerce performance.

Sales flat as losses grow

Second quarter sales decreased marginally by 0.2% to $13.8bn, with identical store sales, excluding fuel, down 1.8%. This was driven by a 4.0% decline in customer traffic, offset by an increase of 2.2% in average ticket size. Net losses for the period came in at $355.2m, compared to a loss of $238.1m in the same period last year.

Investing in price and promotions as competition intensifies

Albertsons’ sales performance was impacted by intensifying competitive activity, with many retailers continuing to invest heavily in reducing prices. Albertsons responded to this through upweighting its own price and promotional activity, helping to lift basket size, but may have impacted visit frequency.

Ecommerce sales up 19%

Ecommerce remains a bright spot for the company, with sales up 19% as it continued with the roll-out of its store pickup service. This will be extended to 80 stores by the end of the current financial year, and to 200 by the end of the following year. Albertsons also continues to invest in its home delivery operation, with its delivery fleet soon to exceed 1,000 vehicles. This year it will invest $350m in supply chain and IT as part of $1.5bn capital expenditure program; its first automated distribution centre is set to come on stream, ahead of the automation of additional DCs. The retailer will also be investing $575m in new stores and remodels.

Focusing on optimising Plated acquisition

A key focus for the retailer moving forward will be optimising its acquisition of Plated, the meal kit company, which was completed after the end of the quarter. Albertsons is aiming to transform the experience for its customers in this area by creating an omni-channel meal kit service. This will include being able to purchase the products in-store, ordering online for store pickup or home delivery via Albertsons’ ecommerce service, or having a regular subscription to the service. Albertsons will be hoping that the acquisition will enable it to build a leadership position in this high growth area.

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Stewart Samuel, Program Director, IGD Canada: based in Canada, Stewart heads up all of IGD's research and coverage on Albertsons. He is also responsible for shaping IGD's research program across North America. Contact Stewart at [email protected] for further insight on the region's markets, channels and retailers. Follow Stewart on Twitter: @Stewart_IGD

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