Albertsons Cuts Forecast as Shoppers Pull Back
Albertsons cuts forecast after first-quarter results, trimming full-year sales and profit outlook as IRA pharmacy headwinds raise near-term earnings risk.
KEY TAKEAWAYS
- Form 8-K revised fiscal-2026 guidance lower across identical sales, adjusted EBITDA and adjusted EPS.
- Filing quantified a 150 basis-point identical-sales headwind from the IRA.
- Management will accelerate price, digital and operational investments that will weigh on near-term earnings.
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Albertsons Companies, Inc. (ACI) cut its fiscal 2026 forecast after reporting first-quarter results on July 23 that showed softer unit trends, lower-income shoppers trading down, and headwinds from the Inflation Reduction Act’s (IRA) pharmacy program. The company lowered its guidance for identical sales, adjusted EBITDA, and adjusted earnings per share (EPS).
First-Quarter Results
For the 16 weeks ended June 20, 2026, Albertsons reported net sales and other revenue of $24.94 billion, a 0.2% increase year over year. Identical sales, or same-store sales, declined 0.8%, while digital sales rose 13%. CEO Susan Morris said the digital and pharmacy businesses continued strong growth, but core grocery faced pressure from weaker industry unit trends and a more cautious consumer.
Net income fell to $85 million, or $0.17 per share, from $236.4 million, or $0.41 per share, a year earlier. Adjusted net income was $210 million, or $0.42 per share. Adjusted EBITDA declined to $1.01 billion, or 4.1% of net sales, down from $1.11 billion (4.5%) in the prior-year quarter. Gross margin narrowed to 26.6% from 27.1%, and selling and administrative expenses rose slightly to 25.6% of sales from 25.4%. The adjusted EPS missed Street consensus by about $0.12–$0.13.
Households facing persistent food inflation and higher gas prices have become more selective, prompting trade-downs to cheaper outlets and private-label brands. This dynamic benefits mass and discount retailers while pressuring mid-market grocers like Albertsons.
Guidance Revision and IRA Headwind
Albertsons filed a Form 8-K on July 23 revising its fiscal 2026 guidance. It now expects identical sales to decline 1.5% to 0.5%, adjusted EBITDA between $3.55 billion and $3.63 billion, and adjusted EPS of $1.75 to $1.85 per Class A share. Previous guidance called for identical sales growth of 0.0% to 1.0%, adjusted EBITDA of $3.85 billion to $3.93 billion, and adjusted EPS of $2.22 to $2.32.
The filing quantified an estimated 150 basis point identical-sales headwind from the IRA’s Medicare drug price negotiation program. Excluding this impact, the outlook implies identical sales roughly flat to up about 1.0%. Management said it will accelerate investments in pricing, digital initiatives, and operations to strengthen its customer value proposition and competitive position. These investments are expected to weigh on near-term earnings but aim to support longer-term traffic and loyalty.
The announcement caused a sharp decline in the company’s stock.
