Grocery retailer Albertsons (NYSE: ACI) met Wall Street’s revenue expectations in Q4 CY2025, with sales up 1.9% year on year to $19.12 billion. Its non-GAAP profit of $0.72 per share was 5.6% above analysts’ consensus estimates.
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Albertsons (ACI) Q4 CY2025 Highlights:
- Revenue: $19.12 billion vs analyst estimates of $19.16 billion (1.9% year-on-year growth, in line)
- Adjusted EPS: $0.72 vs analyst estimates of $0.68 (5.6% beat)
- Adjusted EBITDA: $1.04 billion vs analyst estimates of $1.02 billion (5.4% margin, 2.1% beat)
- Adjusted EPS guidance for the upcoming financial year 2026 is $2.27 at the midpoint, beating analyst estimates by 5.8%
- EBITDA guidance for the upcoming financial year 2026 is $3.89 billion at the midpoint, in line with analyst expectations
- Operating Margin: 2.6%, in line with the same quarter last year
- Free Cash Flow was -$94.7 million, down from $53.6 million in the same quarter last year
- Locations: 2,243 at quarter end, down from 2,273 in the same quarter last year
- Same-Store Sales rose 2.4% year on year, in line with the same quarter last year
- Market Capitalization: $8.66 billion
"Fiscal 2025 was a year of disciplined execution and resilience, as we closed the year with a solid fourth quarter that delivered strong Adjusted EBITDA despite meaningful top-line pharmacy-related headwinds," said Susan Morris, CEO of Albertsons Companies.
Company Overview
With over 20 well-known grocery banners spanning 34 states, Albertsons (NYSE: ACI) operates food and drug retail stores across the US, offering groceries, pharmacy services, and own-brand products under banners like Safeway, Jewel-Osco, and Vons.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years.
With $81.72 billion in revenue over the past 12 months, Albertsons is a behemoth in the consumer retail sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices. However, its scale is a double-edged sword because there is only so much real estate to build new stores, placing a ceiling on its growth. For Albertsons to boost its sales, it likely needs to adjust its prices or lean into foreign markets.
As you can see below, Albertsons grew its sales at a sluggish 2.1% compounded annual growth rate over the last three years as its store footprint remained unchanged.
This quarter, Albertsons grew its revenue by 1.9% year on year, and its $19.12 billion of revenue was in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 2.5% over the next 12 months, similar to its three-year rate. This projection doesn't excite us and indicates its newer products will not catalyze better top-line performance yet.
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Store Performance
Number of Stores
A retailer’s store count influences how much it can sell and how quickly revenue can grow.
Albertsons operated 2,243 locations in the latest quarter, and over the last two years, has kept its store count flat while other consumer retail businesses have opted for growth.
When a retailer keeps its store footprint steady, it usually means demand is stable and it’s focusing on operational efficiency to increase profitability.
Same-Store Sales
The change in a company's store base only tells one side of the story. The other is the performance of its existing locations and e-commerce sales, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales is an industry measure of whether revenue is growing at those existing stores and is driven by customer visits (often called traffic) and the average spending per customer (ticket).
Albertsons’s demand rose over the last two years and slightly outpaced the industry. On average, the company’s same-store sales have grown by 2.1% per year. Given its flat store base over the same period, this performance stems from not only increased foot traffic at existing locations but also higher e-commerce sales as demand shifts from in-store to online.
In the latest quarter, Albertsons’s same-store sales rose 2.4% year on year. This performance was more or less in line with its historical levels.
Key Takeaways from Albertsons’s Q4 Results
It was encouraging to see Albertsons beat analysts’ EBITDA expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its revenue and gross margin were just in line. Overall, this print had some key positives. The market seemed to be hoping for more, and the stock traded down 1.1% to $16.67 immediately following the results.
Should you buy the stock or not? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).
