Supply chain strained by staff shortage, Albertsons officials say; More consumers are eating at home as Omicron expands
Roughly 11 million COVID-19 immunizations which Albertsons said have helped build repeat customers, increase pharmacy and grocery sales and drive gross profit, officials said Tuesday.
“This is a great initiative for us, not only from a business standpoint, but from a societal standpoint as well,” Albertsons Chief Financial Officer Sharon McCollum said on a conference call.
CVS separately forecast that its 2021 profitability will be stronger than previously expected, as officials said surprisingly high demand for COVID-19 vaccines in November and December fueled the largest US pharmacy chain. CVS finance chief Sean Guertin said at an investor conference Tuesday that more people demanded on-location tests, and sales of over-the-counter COVID tests “really took off.”
Walgreens Boots Alliance Inc.
Last week said demand for vaccines and home tests helped drive sales and profits up in the drugstore’s latest quarter, prompting the company to boost its full-year profit forecast.
Albertsons officials said the proliferation of the Omicron version across the US is also prompting consumers to eat more at home. Chain’s similar sales—a metric that removes the effects of store openings and closings—increased 5.2%, excluding fuel. for products.
Rising Covid-19 infections are straining Albertsons’ supply chain, however, as officials say more workers are sickening. He said the chain is expected to face more supply challenges in the next four to six weeks.
“As we move beyond Omicron, we expect to see more of that potential,” Chief Executive Vivek Sankaran said on a call with analysts.
Supermarket companies such as Albertsons benefited from increased sales at the start of the pandemic as restaurants closed dining rooms and consumers cooked more meals at home. Albertsons sales increased compared to the initial months of the crisis, the company said, but similar sales in the latest quarter were up about 18% compared to the same segment in 2019.
Mr Sankaran said Albertsons gained market share in the latest quarter, and fresh food sales are growing faster than the rest of the store. He said the company is automating production and simplifying tasks in stores so that employees can spend more time on the floor.
Like other grocers, Albertsons is spending more on overtime and raising wages to cope with the labor shortage, officials said. Officials said Albertsons’ costs continue to rise in other areas, such as packaging, materials and transportation.
Mr. Sankaran said the company has been prudent in how it transmits such growth to the consumers.
“We have a strong consumer base. We have not seen any dramatic change in their behaviour,” he said, adding that he does not yet know whether the behavior of shoppers will change if inflation continues.
Albertsons’ digital sales for the quarter grew 9% compared to a year ago and more than tripled compared to two years ago. The company said it will continue to invest in e-commerce, including pickup and warehouse for online orders.
Albertsons lifted its outlook for the fiscal year running through February, anticipating that similar sales would decline less than the company’s previous forecast. The company said it now expects adjusted earnings of $2.95 per share for the February-ended year of $2.90, up from previous guidance of $2.50 to $2.60.
At Monday’s closing price of $31.90, Albertsons shares have more than doubled since the first trading day since the company’s June 2020 initial public offering, when shares closed at $15.45. The stock fell 6% on Tuesday morning.
—Sharon Terlep contributed to this article.