Albertsons Cos Inc. (NYSE:ACI) reported a sharp decline in second-quarter earnings and lower identical-store sales Tuesday, prompting the Boise, Idaho-based supermarket operator to withdraw its fiscal 2026 financial guidance and launch a comprehensive business review aimed at accelerating a turnaround.
The company reported net sales and other revenue of $18.89 billion for the 12 weeks ended September 12, down 0.1% from $18.92 billion a year earlier. Identical sales declined 0.8%, reflecting continued weakness in its core supermarket business.
Net income fell to $51.5 million, or $0.11 per share, from $168.5 million, or $0.30 per share, in the comparable period last year. Adjusted net income declined to $179 million, or $0.36 per share, while adjusted EBITDA decreased to $784 million from $848 million.
Despite the weaker performance, adjusted earnings exceeded Wall Street’s consensus estimate of $0.33 per share. Revenue also slightly exceeded analysts’ expectations of approximately $18.87 billion.
Digital Growth Fails to Offset Margin Pressure
Digital sales increased 11% during the quarter, while pharmacy sales continued to grow despite reimbursement-related pressures associated with the Inflation Reduction Act.
However, higher fulfillment and handling costs associated with digital growth, along with increased shrink, contributed to lower profitability.
Gross margin narrowed to 26.8% from 27.0% a year earlier. Excluding fuel and last-in, first-out inventory accounting expenses, gross margin declined 17 basis points.
Selling and administrative expenses increased to 25.6% of revenue from 25.4%, primarily because lower identical sales reduced the company’s ability to spread operating costs across its sales base.
The results highlighted the challenge facing Albertsons as it attempts to expand higher-growth businesses while improving the profitability of its traditional supermarket operations.
Company Expands Turnaround Efforts
Chief Executive Officer Susan Morris acknowledged that Albertsons’ performance remains below management’s expectations, despite results falling within its previously revised outlook.
“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,” Morris said.
The new business review will examine Albertsons’ customer strategy, operating costs, organizational structure, store banners, geographic markets, assets and capital allocation.
The initiative builds on ACI Edge, the restructuring announced in July that consolidated 11 operating divisions into four regions and centralized center-store merchandising.
Albertsons expects to complete the review during its fiscal fourth quarter and present a comprehensive turnaround plan, along with updated short- and long-term financial targets, by its fourth-quarter earnings call. An investor day is planned for spring 2027.
Executive Chair Meg Whitman, appointed in September, said the company must accelerate cost reductions and reinvest savings in lower prices, improved store experiences and stronger customer traffic.
ACI Shares Recover After Early Decline
Albertsons shares initially fell following the earnings announcement, declining more than 1% in premarket trading before recovering during Tuesday’s regular session.
The stock was trading approximately 2% higher in morning trading, near $12.80 per share, although it remained roughly 27% below its level at the beginning of 2026. The shares have traded between $10.86 and $20 over the past 52 weeks.
The positive intraday reaction came despite the company’s withdrawal of financial guidance and steep decline in quarterly net income, suggesting investors were weighing the potential benefits of a more aggressive restructuring against continuing operating weakness.