Albertsons Q1 Sales Up on Digital Growth

Albertsons Companies (NYSE:ACI) reported first quarter 2025 results on July 15, 2025, with same-store sales growth of 2.8%, adjusted EBITDA of $1.11 billion, and adjusted EPS of $0.55, but lower year-over-year profitability. Management raised its FY2025 same-store sales growth outlook to 2%–2.75%, driven by outsized pharmacy and digital gains, while reiterating its unchanged adjusted EBITDA and adjusted EPS guidance for FY2025.

Key strategic developments this quarter provide insight into digital transformation progression, margin dynamics, and execution of the cross-shopping flywheel.

Accelerated Digital and E-commerce Momentum, Near Breakeven Profitability

Albertsons’ e-commerce revenue grew 25% year over year and accounted for 9% of total grocery sales, although penetration is still below peers. Investments in digital capabilities, proprietary mobile apps, and interactive features support rapid customer adoption and ongoing engagement across omni-channel touchpoints.

"Our first digital platform is e-commerce, which grew 25% and reached 9% of total grocery revenue in the first quarter. This growth was again led by strong performance in our first-party business, driven by award-winning capabilities and our fully integrated mobile app, and supported by our five-star certification program."
— Susan Morris, CEO

E-commerce scale and operational leverage, combined with a store-based fulfillment model, are driving efficiencies in Albertsons' operations.

Sustained Pharmacy Outperformance Drives Top-Line Growth Amid Normalizing Margins

Pharmacy and health platform sales surged 20%, with GLP-1 medications contributing half of pharmacy comp growth, and non-GLP-1 script growth was also robust. Increased store traffic from pharmacy customers is a central engine of incremental long-term customer value, and Albertsons has opened its third central fill facility to further increase pharmacy efficiency.

"The ongoing integration of pharmacy and Sincerely Health into our overall digital experience. Cross-shoppers between grocery and pharmacy are exceptionally valuable. Over time, these customers visit the store four times more often and buy significantly more groceries with us, resulting in outsized customer lifetime value."
— Susan Morris, CEO

Unique integration of pharmacy and grocery supports recurring visits and customer stickiness, yet persistent mix shift toward pharmacy creates ongoing margin pressure until optimization and cross-shopping gains are fully realized.

Margin Headwinds Offset by Productivity Programs and Strategic Pricing Investments

Gross margin, excluding fuel and legal expense, declined 85 basis points due to incremental investments in the customer value proposition and the mix shift impact related to the strong growth in pharmacy and digital businesses, although partially offset by shrinkage and productivity gains. National buying initiatives and automation are expected to provide gross margin tailwinds in the second half of FY2025, while selling and administrative expense rates improved by 63 basis points year over year, driven by productivity actions and reduced merger-related costs.

"As we think about Q1, it was actually one of our largest overlaps year over year. And thus the compare that you're seeing from the gross margin investment. That said, as I mentioned before, we're gonna continue to invest in margin, but we also expect our productivity to begin to provide a tailwind as our national buying gradually kicks in as the year progresses."
— Susan Morris, CEO

The balance between volume-driven price investment and cost reduction initiatives will determine whether Albertsons can stabilize margins and sustain profit growth in the face of elevated competitive intensity and labor inflation.

Looking Ahead

Management raised same-store sales growth guidance for fiscal 2025 to 2%–2.75% and expects adjusted EBITDA of $3.8 billion to $3.9 billion for FY2025, with Q2 FY2025 comparable sales anticipated at the low end of the range before accelerating in the second half. Adjusted EPS (non-GAAP) guidance for FY2025 remains at $2.16–$2.30, including $0.03 from the extra week, with capital expenditures unchanged at $1.7 billion to $1.9 billion for FY2025. For fiscal 2026, the company continues to target long-term identical sales growth of 2% or more and adjusted EBITDA growth (non-GAAP) exceeding sales in FY2026.

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