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10/19/2021

Albertsons Own Brands on pace for year-end goal

Retailer reported a strong second quarter, highlighted by its aggressive omnichannel strategy and store brand penetration.
Dan Ochwat
Executive Editor
Dan Ochwat profile picture

The Albertsons private brands portfolio reached a sales penetration level of 25.2% in the second quarter of 2021, as the retailer reported quarterly results that exceeded its expectations, and touted its growing omnichannel strategy.

“In own brands, the introduction of new products as well as the rollout of own brands into Albertsons’ legacy divisions has generated strong growth,” said Albertsons CEO Vivek Sankaran.

"In own brands, the introduction of new products as well as the rollout of own brands into Albertsons’ legacy divisions has generated strong growth."
Vivek Sankaran, CEO, Albertsons during Q2 call

The Own Brands division launched 85 new products in the quarter, including ready-to-heat meals, refrigerated signature reserve pasta items and several O organics coffee items. Sankaran said the store brand rollouts are on pace to reach its goal of more than 800 new product introductions by end of 2021, having rolled out more than 400 already. This is on par with what the retailer reported for Q1 2021, where it also saw 25.2% market penetration for its own brands.

The Boise, Idaho-based chain also said fresh offerings outpaced the center store by 250 basis points and sales of fresh items are ahead of pre-pandemic levels, as more consumers eat meals at home, Sankaran said during the financial call.

In the quarter ending Sept. 11, Albertsons reported same-store sales up 1.5%, and on a two-year stacked basis saw identical sales growth was up 15.3%. The chain opened seven new stores and remodeled 76.

However, digital and its omnichannel strategy is the big story for the quarter, expanding its “Drive Up and Go” locations as well as inking delivery deals with DoorDash and more.

Albertsons of late has grown its Instacart partnership into foodservice, and it has signed up with Uber Eats. Additionally, Albertsons is testing a subscription model and the chain also recently announced new digital tools with Pinterest and Firework that enhance how consumers can engage with its store brands.

Sankaran said during the financial call that omnichannel shoppers spend three times more money at the retail chain than shoppers who solely shop inside stores, highlighting why the chain is continuing to push toward digital and physical offerings.

For Q2 2021, digital sales increased 5% and on a two-year stacked basis digital sales increased 248%. The leading grocer reported net income of $295 million, with an adjusted net income of $370 million.

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Sharon McCollam

In its Just for You loyalty program, Sankaran said membership increased by more than 20% during the quarter, surpassing 27 million members and saw a 93% retention rate of active members during the quarter.

To kick off the quarterly call, Sankaran welcomed Sharon McCollam, who they lured out of retirement to take over as president and CFO, leading Albertsons’ finance, IT, real estate, strategy, corporate development and supply chain divisions. She has six weeks under her belt in the new position and also shared results during the financial call.

"The favorable consumer backdrop together with our focus on in-store excellence, accelerating our digital and omnichannel capabilities, increasing productivity and strengthening our talent and culture, are driving increased identical sales and improved performance,” said Sankaran. "Based on this strong performance, today we announced a 20% increase to our quarterly dividend, and have raised our fiscal year 2021 outlook."