Digital, fresh foods, own brands drive a robust Q3 at Albertsons
Albertsons president and CEO Vivek Sankaran called the retailer’s third quarter as “Another quarter of robust results,” as he opened the retailer’s third-quarter financial call — and the company's performance bears him out.
The retailer’s same-store sales were up 12.3% for the period ended Dec. 5, and digital sales exceeded 200% year-over-year growth for the third straight quarter, topping out at a 225% increase in Q3. Revenue was $15.4 billion for the quarter compared with $14.1 billion in the prior-year period.
The Boise, Idaho-based retailer said its private brands continue to be a key differentiator. Own Brands penetration reached 25% for the quarter, on track for its long-held goal of 30% penetration in the next few years, Sankaran said. The company has shown steady rise in penetration with 21.9% market penetration in 2016, 23% in 2017, 25.1% in 2018, and 25.4% in 2019, as reported in an earlier call dedicated to Own Brands. Supply issues from the pandemic slowed some growth but Sankaran said Tuesday that supply issues look to be abated and penetration will continue to rise.
He also mentioned that Albertsons launched 1,000 new private brand products through the period, already exceeding a previously stated goal of 800 new items. Some new products launched in the quarter included Signature Select frozen egg bites, Signature Select sparkling wine for the holidays, and frozen family packs of frozen fresh fish under its Waterfront bistro brand.
“Innovation is tailored to contemporary customer needs,” Sankaran said of the new own brands, focusing largely on meal solutions and cooking at home. He said private brand sales in categories like baking, cheese, convenience salads and nuts were very strong in Q3.
O Organics and Open Nature continued to see positive results, posting a combined 12% increase in sales for the quarter compared to a year ago.
Fresh foods also were a key driver for the quarter, seeing gains in shrimp, bacon, beer and chicken. Sankaran said the average spend on fresh food was up 200 basis points and shoppers are making two to three trips a week to stores to focus on fresh foods.
Loyalty has also grown as Albertsons has seen an increase in loyalty program usage grow 17.5% in the quarter and those customers represent 40% of sales.
Digital also is clearly becoming an important strategy to the retailer, having recently launched an automated, contactless pickup technology. The company is also expanding its Drive Up & Go program to nearly 1,400 stores by the end of the fiscal year and is testing self-serve pickup lockers in select markets. The lockers are being tested at Jewel-Osco locations in Chicago and Safeway locations in the San Francisco Bay Area. Customers in those areas can place orders using those stores' websites and apps with goods stored in the lockers for convenient pickup.
"It is clear that our strategy is working, and as we continue to execute on our strategic priorities, we believe we are well positioned to deliver sustainable growth over the long term,” Sankaran said. “At the same time, we remain focused on delivering value to all stakeholders, including taking care of our customers, associates and the communities we serve as we continue to navigate through the pandemic."