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Albertsons Boasts Major Growth as it Heads Toward Rite Aid Merger

Albertsons Boasts Major Growth as it Heads Toward Rite Aid Merger

Tuesday, July 17th, 2018

As the retailer nears the summation of its blockbuster brick-and-mortar merger with Rite Aid, Albertsons Companies reported its first quarter fiscal 2018 results this week. Specifically, the retailer announced significant growth in its burgeoning e-commerce business as a result of dividends coming from the company’s investments in e-commerce and its Own Brands, as we reported on our sister publication.

Albertsons' E-Commerce is booming as the company heads towards its merger with Rite-Aid

Highlights from the quarter included:

  • Identical sales increase of 0.2%
  • Adjusted EBITDA of $815.8 million, an increase of $44.1 million or 5.7%
  • Gross profit margin, excluding fuel, improved 60 basis points
  • Fiscal 2018 outlook reaffirmed including 1.5% to 2.0% identical sales growth and Adjusted EBITDA of $2.7 billion
  • Expanded Own Brands to include over 400 new items
  • Increased Own Brands sales penetration by 56 basis points to 24.0%
  • E-commerce sales, including sales of Plated meal kits, grew 108%
  • Converted 243 stores; on track with the Safeway integration efforts, with all store conversions to be completed by September 2018.

Bob Miller, Chairman and CEO, Albertsons“We are pleased with our first quarter results as both identical sales and Adjusted EBITDA increased for the second consecutive quarter,” said Bob Miller, Chairman and CEO, in a press release. “We continue to roll out unique options for our customers as we strive to differentiate through our best in class Own Brands and rapidly expanding e-commerce offerings. We are also reaffirming our fiscal 2018 guidance today and remain on track to deliver annual Adjusted EBITDA of $2.7 billion and complete the store conversions related to the Safeway integration by September, which we expect to allow us to further grow and enhance our operating performance.”

Speaking specifically about the Rite Aid merger, President and COO Jim Donald said the company anticipates several billion dollars in synergies to take effect upon completion of the deal.

Jim Donald, President and Chief Operating Officer, Albertsons"We are also looking forward to our merger with Rite Aid," added Donald. "Together we will be a differentiated leader in Food, Health and Wellness. We expect to realize $375 million in annual run-rate cost synergies within three years, and have the opportunity to generate $3.6 billion in annual sales synergies to fuel our future growth."

Rite Aid stockholders have scheduled a meeting for August 9, 2018, to vote on the proposed merger—with some investors rallying to stop the deal.

Will Albertsons find even more success after its merger with Rite Aid? Deli Market News will continue to keep you updated on what's happening in the retail sector.

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