second quarter of fiscal 2026
Filed Oct 13, 2026Albertsons Companies, Inc. Reports Second Quarter Fiscal 2026 Results Accelerates Turnaround and Cost Savings Efforts
Identical sales decreased 0.8%, net sales and other revenue decreased 0.1%, gross margin rate declined to 26.8%, and GAAP net income, adjusted net income and Adjusted EBITDA were below the prior-year quarter. The Company withdrew its fiscal 2026 outlook while undertaking a comprehensive business review.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net sales and other revenue, 12 weeks ended September 12, 2026GAAP | $18.89B | – | decreased 0.1% |
| Cost of sales, 12 weeks ended September 12, 2026GAAP | $13.84B | – | – |
| Gross margin, 12 weeks ended September 12, 2026GAAP | $5.06B | – | – |
| Gross margin rate, 12 weeks ended September 12, 2026GAAP | 26.8% | – | – |
| Gross margin rate excluding the impact of fuel and LIFO expense, 12 weeks ended September 12, 2026other | / decreased 17 basis points | – | decreased 17 basis points |
| Selling and administrative expenses, 12 weeks ended September 12, 2026GAAP | $4.84B | – | – |
| Selling and administrative expenses as a percentage of Net sales and other revenue, 12 weeks ended September 12, 2026GAAP | 25.6% | – | – |
| Selling and administrative expenses as a percentage of Net sales and other revenue excluding the impact of fuel, 12 weeks ended September 12, 2026other | increased 38 basis points | – | increased 38 basis points |
| Loss on property dispositions and impairment losses, net, 12 weeks ended September 12, 2026GAAP | $42.4M | – | – |
| Operating income, 12 weeks ended September 12, 2026GAAP | $174.5M | – | – |
| Interest expense, net, 12 weeks ended September 12, 2026GAAP | $125M | – | – |
| Other income, net, 12 weeks ended September 12, 2026GAAP | $13.2M | – | – |
| Income before income taxes, 12 weeks ended September 12, 2026GAAP | $62.7M | – | – |
| Income tax expense, 12 weeks ended September 12, 2026GAAP | $11.2M | – | – |
| Effective tax rate, 12 weeks ended September 12, 2026GAAP | 17.9% | – | – |
| Net income, 12 weeks ended September 12, 2026GAAP | $51.5M | – | – |
| Basic net income per Class A common share, 12 weeks ended September 12, 2026GAAP | $0.11 | – | – |
| Diluted net income per Class A common share, 12 weeks ended September 12, 2026GAAP | $0.11 | – | – |
| Adjusted net income, 12 weeks ended September 12, 2026non-GAAP | $179M | – | – |
| Adjusted net income per Class A common share, diluted, 12 weeks ended September 12, 2026non-GAAP | $0.36 | – | – |
| Adjusted EBITDA, 12 weeks ended September 12, 2026non-GAAP | $784M | – | – |
| Adjusted EBITDA as a percentage of Net sales and other revenue, 12 weeks ended September 12, 2026non-GAAP | 4.1% | – | – |
| Identical sales, 12 weeks ended September 12, 2026other | decreased 0.8% | – | decreased 0.8% |
| Digital sales, 12 weeks ended September 12, 2026other | increased 11% | – | increased 11% |
| Net sales and other revenue, 28 weeks ended September 12, 2026GAAP | $43.84B | – | – |
| Cost of sales, 28 weeks ended September 12, 2026GAAP | $32.14B | – | – |
| Gross margin, 28 weeks ended September 12, 2026GAAP | $11.70B | – | – |
| Gross margin rate, 28 weeks ended September 12, 2026GAAP | 26.7% | – | – |
| Selling and administrative expenses, 28 weeks ended September 12, 2026GAAP | $11.22B | – | – |
| Selling and administrative expenses as a percentage of Net sales and other revenue, 28 weeks ended September 12, 2026GAAP | 25.6% | – | – |
| Loss (gain) on property dispositions and impairment losses, net, 28 weeks ended September 12, 2026GAAP | $37.7M | – | – |
| Operating income, 28 weeks ended September 12, 2026GAAP | $438.1M | – | – |
| Interest expense, net, 28 weeks ended September 12, 2026GAAP | $291.7M | – | – |
| Other income, net, 28 weeks ended September 12, 2026GAAP | $30M | – | – |
| Income before income taxes, 28 weeks ended September 12, 2026GAAP | $176.4M | – | – |
| Income tax expense, 28 weeks ended September 12, 2026GAAP | $40.2M | – | – |
| Net income, 28 weeks ended September 12, 2026GAAP | $136.2M | – | – |
| Diluted net income per Class A common share, 28 weeks ended September 12, 2026GAAP | $0.28 | – | – |
| Adjusted net income, 28 weeks ended September 12, 2026non-GAAP | $389.3M | – | – |
| Adjusted net income per Class A common share, diluted, 28 weeks ended September 12, 2026non-GAAP | $0.77 | – | – |
| Adjusted EBITDA, 28 weeks ended September 12, 2026non-GAAP | $1.80B | – | – |
| Net cash provided by operating activities, 28 weeks ended September 12, 2026GAAP | $1.21B | – | – |
| Payments for property, equipment and intangibles, including lease buyouts, 28 weeks ended September 12, 2026GAAP | −$899.6M | – | – |
| Net cash used in investing activities, 28 weeks ended September 12, 2026GAAP | −$858M | – | – |
| Net cash used in financing activities, 28 weeks ended September 12, 2026GAAP | −$271.7M | – | – |
| Cash and cash equivalents, September 12, 2026GAAP | $282M | – | – |
| Total debt (including finance leases), September 12, 2026non-GAAP | $9.33B | – | – |
| Total Net debt ratio, September 12, 2026non-GAAP | 2.42 | – | – |
Capital returns
- During the first 28 weeks of fiscal 2026, the Company repurchased 26.0 million shares of common stock for a total of $387.6 million pursuant to the existing multi-year repurchase authorization.
- During the first 28 weeks of fiscal 2025, the Company repurchased 25.7 million shares of common stock for a total of $550.1 million.
- The Company paid its quarterly dividend of $0.17 per share on August 7, 2026 to stockholders of record as of July 24, 2026.
- The Company announced the next quarterly dividend payment of $0.17 per share to be paid on November 6, 2026 to stockholders of record as of the close of business on October 23, 2026.
What drove it
- The decrease in Net sales and other revenue was driven by a decline in identical sales of 0.8% and was partially offset by higher fuel sales.
- Pharmacy sales continued to grow despite ongoing Inflation Reduction Act headwinds, and digital sales increased 11%.
- The gross-margin-rate decline was primarily driven by delivery and handling costs associated with digital growth and higher shrink, partially offset by improved pharmacy margins primarily related to the impact of the IRA.
- Selling and administrative expenses as a percentage of revenue increased primarily due to sales deleveraging resulting from lower identical sales, while productivity and cost-management benefits offset operating-expense inflation and increased merger-related litigation costs.
- The $42.4 million net loss on property dispositions and impairment losses was primarily driven by retail store impairment losses and disposals of equipment.
- Interest expense, net increased primarily because of higher average outstanding borrowings.
Concerns
- Identical sales decreased 0.8% and net sales and other revenue decreased 0.1% in the second quarter.
- Gross margin rate decreased to 26.8% from 27.0%, with digital delivery and handling costs and higher shrink cited as pressures.
- Operating income was $174.5 million versus $295.3 million, while net income was $51.5 million versus $168.5 million.
- Interest expense, net increased to $125.0 million from $105.3 million.
- The Company is no longer providing a fiscal 2026 outlook pending completion of its comprehensive business review.
What to watch
- Completion of the comprehensive business review during the fourth quarter and the planned refreshed short- and long-term financial framework alongside the comprehensive turnaround plan.
- Execution of ACI Edge, including consolidation of 11 divisions into four regions and centralization of center-store merchandising under a single enterprise team.
- The review of customer strategy, cost structure, operating model, portfolio of banners, markets, assets and businesses, and capital allocation priorities.
- The planned investor day in Spring 2027.
- Trends in identical sales, pharmacy sales, digital sales, shrink, digital delivery and handling costs, and interest expense.
Balance sheet and cash flow
- Cash and cash equivalents were $282.0 million as of September 12, 2026, compared to $198.6 million as of February 28, 2026.
- Total current liabilities were $8,648.7 million as of September 12, 2026, and long-term debt and finance lease obligations were $8,446.0 million.
- Net cash provided by operating activities was $1,210.3 million during the first 28 weeks of fiscal 2026, compared to $1,282.0 million during the first 28 weeks of fiscal 2025.
- Capital expenditures were $899.6 million during the first 28 weeks of fiscal 2026, primarily including 38 remodels, seven new stores and investment in digital and technology platforms.
- Proceeds from issuance of long-term debt, including ABL facility, were $400.0 million, while payments on long-term borrowings, including ABL facility, were $(59.8) million during the first 28 weeks of fiscal 2026.
- Total debt net of cash and cash equivalents was $9,046.2 million as of September 12, 2026, compared to $7,855.9 million as of September 6, 2025.
Analysis
Second-quarter demand trends weakened. Identical sales decreased 0.8%, driving a 0.1% decline in net sales and other revenue to $18,894.7 million. Higher fuel sales partly offset the decline. Pharmacy remained a growth area despite Inflation Reduction Act headwinds, and digital sales increased 11%, but the filing does not provide dollar revenue for either activity.
Margins and earnings deteriorated. Gross margin rate fell to 26.8% from 27.0%, with delivery and handling costs associated with digital growth and higher shrink identified as the principal drivers. Selling and administrative expenses were relatively flat in dollars, but rose to 25.6% of revenue from 25.4% as lower identical sales caused deleveraging. Operating income declined to $174.5 million from $295.3 million, while a $42.4 million property-disposition and impairment loss and higher interest expense further weighed on GAAP net income.
GAAP net income was $51.5 million, or $0.11 per diluted share, compared with $168.5 million, or $0.30 per diluted share. Adjusted net income was $179.0 million, or $0.36 per diluted share, versus $248.4 million, or $0.44 per diluted share, and Adjusted EBITDA declined to $784.0 million from $848.4 million. For the first 28 weeks, net sales and other revenue were $43,836.3 million, while operating income was $438.1 million and net income was $136.2 million, each below the comparable prior-year period.
Cash generation remained material, with $1,210.3 million of operating cash flow during the first 28 weeks, against $899.6 million of payments for property, equipment and intangibles. The Company repurchased 26.0 million shares for $387.6 million and paid $166.6 million in common-stock dividends during that period. Cash and cash equivalents were $282.0 million at September 12, 2026, while total debt including finance leases was $9,328.2 million and the total net debt ratio was 2.42.
Management has moved to a turnaround posture. ACI Edge consolidated 11 divisions into four regions and centralized center-store merchandising. The Company is reviewing its customer strategy, cost structure, operating model, portfolio and capital-allocation priorities, has withdrawn fiscal 2026 outlook, and expects to provide a refreshed financial framework with its turnaround plan by its fourth-quarter earnings call.
Management, verbatim
Although our second quarter performance was in-line with the expectations in our revised outlook, our results do not reflect the potential of the Company.
Susan Morris, Chief Executive Officer
We are launching a comprehensive business review to speed up improvements in Albertsons' performance and tackle even harder a cost structure we can no longer afford.
Susan Morris, Chief Executive Officer
Our work will find opportunities to simplify the organization, improve decision-making, reinvest savings in customer value, and boost long-term shareholder returns.
Susan Morris, Chief Executive Officer
Not in the filing
stated, not guessed- Forward fiscal 2026 revenue, gross margin, operating expense, tax-rate, earnings and Adjusted EBITDA guidance were not provided because the Company is no longer providing a fiscal 2026 outlook.
- Previous-outlook figures were not provided in the supplied documents; therefore, no reported results can be compared with prior guidance.
- Free cash flow was not reported.
- Reportable segment revenue and segment profitability were not reported.
- Prior-quarter comparisons for the reported operating metrics were not reported.
- Dollar revenue for pharmacy sales and digital sales was not reported.
- A prior-year value for gross margin rate excluding fuel and LIFO expense was not reported.
- A prior-year value for selling and administrative expenses as a percentage of revenue excluding fuel was not reported.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.