The CEO of Albertsons (ACI) is confident — despite the grocery and pharmacy giant’s forecasted comparable sales falling between 6% and 7.5% in fiscal 2021 — as it continues to engage with its new and existing customers.
“We know the economy will open. We know that we won’t sustain the same levels of sales as we did in 2020, but our challenge and our confidence is that we’ll be able to keep a good portion of those sales so that we finished 2020 better than we would have without a pandemic. That is the game … and we’re seeing that play out in our first several weeks of this quarter, like we imagined,” CEO Vivek Sankaran told Yahoo Finance Live on Monday.
On Monday, Albertsons, which operates 2,277 retail stores and 1,727 pharmacies across brands such as Safeway, Shaw’s, Acme, Tom Thumb, Randalls, and others, reported better-than-expected fourth-quarter earnings results. The company also provided guidance that comparable sales would be lower year-over-year, sending its stock down more than 5.7%.
For the fourth quarter ended Feb. 27, the grocer delivered adjusted earnings per share of 60 cents, beating expectations of earnings per share of 51 cents. Revenue also topped estimates, coming in at $15.8 billion compared to forecasts of $15.64 billion.
During the quarter, the company’s same-store sales growth hit 11.8%, while same-store sales hit 16.9% for the fiscal year.
In Albertsons’ fiscal 2021 outlook, the company said it sees identical sales falling between 6% and 7.5% from a year ago. Compared to 2019, identical sales are expected to grow between 9.4% to 10.9%, the company added.
“For a company like ours, typically, pre-pandemic, 2.5, 3% a year growth would have been terrific, right, for the P&L. And that would have been like a 5% to 6% two-year stack. We’re predicting a 9.5% to 11% two-year stack, which means we’re re-baselining the business. The business is going to continue to grow from a very different baseline post-pandemic,” Sankaran told Yahoo Finance.
The CEO noted that the grocer saw an increase in sales because of the pandemic that resulted in more people eating at home.
“As the economy opens, some of that will go back to away-from-home consumption,” Sankaran added.
Last year, Albertsons said it could identify 11 million new customers added last year across its stores.
“When you can identify them, you can track what they’re buying, you can track how often they’re coming and how those patterns are changing. And then we have 25 million customers in what we call our loyalty program, where we can engage with them on different kinds of rewards. That’s the magic so harnessing that data so we keep them engaged on categories that matter to them,” Sankaran said.
Albertsons also saw its digital sales post explosive growth of 282% in the quarter and 258% for the year.
As the grocer continues to add more DriveUp & Go curbside pickup locations to fulfill e-commerce orders, the company is already seeing 20% in more spend from customers that use its e-commerce offerings, according to Sankaran.
“Here’s the lesson we learned through this pandemic — that we always gave customers, when they shopped with us, rewards around pricing and fuel if they shopped with us. And we found that when we turned e-commerce on, there’s a segment of customers who are less sensitive to pricing or fuel rewards, but want that convenience, and so they spend more with us,” the CEO added.
According to Sankaran, the company’s “best customers” are those who spend online as well as in-store.
“We think that’s going to continue to grow. We are expanding our online coverage. We’re adding more DriveUp & Go locations, becoming more efficient and faster in delivery. And so we see a lot more upside to this business. We’re excited about the incrementality that it brings to us because we are getting these households to spend more with us when we offer that convenience to them,” he added.
Julia La Roche is a correspondent for Yahoo Finance. Follow her on Twitter.