Shares of Albertsons Companies Inc ACI were higher by more than 4% after the grocery store company reported a top-and-bottom-line beat in its second-quarter results.
Earnings Highlights: Albertsons said it earned 60 cents per share in the second quarter on revenue of $15.76 billion versus expectations of 25 cents per share and revenue of $15.5 billion. Identical sales grew 13.8% in the quarter while digital sales soared higher by 243%.
Net income fell from $294.8 million in the same quarter last year to $284.5 million. But last year's net income included the benefit of gains related to sale-leaseback transactions. Gross profit margin improved from 27.8% last year to 29%.
Related Link: Why Analysts Are Adding Albertsons To Their Shopping Lists After Grocer's IPO
CEO On New Trends: The COVID-19 pandemic has now lasted eight months and the grocery store is seeing new trends play out, Albertsons CEO Vivek Sankaran said on CNBC. Specifically, shopping less often but spending more per visit and are eating more often at home.
Albertsons benefits from this trend by offering a one-stop-shop for all grocery needs and this trend was apparent in the earnings release.
Digital Growth: Albertsons' fastest-growing piece of its digital business is curbside pickup, the CEO said. Customers appreciate the convenience of staying in a parking spot and picking up the grocery products they are familiar with.
The company will expand this feature to 1,800 stores between this year and next year, the CEO said.
Debunking Barclays: Jim Cramer highlighted concerning commentary from Barclays analysts that argue Albertsons' recent market share gains are not sustainable because of the company's "well above the competition" pricing. Instead of looking at market share gains in terms of dollars, the CEO said he also looks at market share gains in terms of unit sold.
During the quarter Albertsons indeed gained market share in terms of units sold and showed investors gross margin growth. As such, the company is executing the right strategy.
When it comes to eating at home, consumers can certainly shop around and compare prices but Albertsons sells the freshest products that live up to expectations.
"Quality matters and that's the advantage we are seeing and we are building and doubling down on it," Sankaran said. "We think it is incredibly sustainable."
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