Albertsons takes a hit on outlook, but outgoing CEO says ‘Our mojo is back’

Earlier this year, Albertsons announced it plans to cut $1.5 billion in spending and is consolidating its Intermountain Division, which covers most of Idaho, Montana, and Wyoming, with its Denver Division, which covers Colorado and surrounding areas.

Albertsons is also investing in data analytics within its supply chain, rolling out a new warehouse management system over the course of the year. 

“By the end of 2025, we expect 30% of our distribution volume to be automated, and we’re piloting innovative new technology to extend our menu of options for future warehouse automation,” according to Morris, who added that Albertsons aims to “lower our cost of service and improve our end-to-end data analytic capabilities, resulting in better in-stock conditions and a differentiated level of quality and fresh.”

Pharmacy sales were a bright spot for Albertsons in the fourth quarter, serving as the primary driver of a 2.3% increase in identical sales, Morris said. 

Albertsons’ pharmacy business got a boost from growth in prescriptions and immunizations, a trend driven largely by the closure of competitors like Walgreens and Rite Aid. 

“Although the pharmacy business is financially dilutive, cross shoppers between grocery and pharmacy are exceptionally valuable, contributing outside customer lifetime value to the total store. For this reason, in fiscal 2025 we will continue to invest in our pharmacy and health platforms to drive increased customer engagement and loyalty,” Morris said. 

Albertsons experienced 15% year-over-year growth in loyalty memberships in the fourth quarter, eclipsing 45 million, and actively engaged customers increased 12%. 

Morris attributed this in part to the success of Albertsons’ “for U” loyalty program, which is free to customers and enables them to earn loyalty points and use them to reduce their overall grocery bill. 

“Since launching the simplified program, 20% of engaged households are now electing the new cash-off option, reinforcing the customer desire for immediate value,” Morris said. 

She added that since “for U” launched in April 2024, over 9 million customers have engaged with the feature. 

Morris said the company has deployed a task force to monitor volatility in the market, particularly associated with tariffs on imports from the Trump administration. 

Albertsons procures 90% of its products domestically, she said, “so that’s a very different position than some of our competitors out there.

“We also recognize, though, that even in those domestic purchases, there are impacts from ingredients that are sourced from tariff-impacted areas,” she said. “The situation, as you know, is very fluid. We’re staying very close to it.” 

Albertsons is also keeping a close eye on the rise of GLP-1 drugs like Ozempic and Wegovy. Morris said they are contributing to the company’s growth.

“[A]s we engage those customers into our entire ecosystem, recognizing clearly their eating habits change, but their eating habits change with regard to wanting more protein, for supplements, more fruits and vegetables, we have all of those things, so it’s actually an opportunity for us to even more deeply engage those customers,” Morris said. 

McCollom said Albertsons believes customers will choose the store “for the role that we play in their health care.”