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Albertsons reported Q2 FY2027 revenue of $18.9 billion, above the $18.8 billion consensus. Adjusted earnings per share were $0.36, compared with the $0.33 consensus.
Revenue was $18.9 billion in the year-ago quarter as well. In its filing, Albertsons said identical sales excluding fuel declined 0.8%, while digital sales rose 11% and pharmacy sales grew despite Inflation Reduction Act headwinds. Higher fuel sales partly offset the decline in identical sales.
Gross margin fell to 26.8% from 27.0%. The filing attributed the decline excluding fuel and LIFO to higher delivery and handling costs associated with digital growth and higher shrink, partly offset by improved pharmacy margins. Operating margin declined to 0.92% from 1.56%.
Albertsons reported diluted earnings per share of $0.11, down from $0.30 a year earlier. Free cash flow was $78.1 million, compared with $166.1 million in the year-ago quarter.
| Q2 FY2027 | Q2 FY2026 | Change | |
|---|---|---|---|
| Revenue | $18.9 billion | $18.9 billion | −0.11% |
| Diluted EPS | $0.11 | $0.30 | −64.8% |
| Gross margin | 26.8% | 27.0% | −0.2 percentage points |
| Operating margin | 0.92% | 1.56% | −0.6 percentage points |
| Free cash flow | $78.1 million | $166.1 million | −53.0% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $0.36 | $0.33 | Beat by 9.09% |
| Revenue | $18.9 billion | $18.8 billion | In line |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
What management said on the call
CEO Susan Morris told analysts that traffic and units were below where Albertsons wanted them and that customers faced elevated fuel prices and inflation. In response to a question about shoppers, she said lower-income customers were trading down, seeking value and buying more private label; she expected that behavior to continue in the short term.
Interim CFO Cody Perdue said e-commerce sales rose 11% in the quarter, with digital penetration reaching 10.5%. He said pharmacy identical sales grew alongside prescription volumes, but the Inflation Reduction Act and the shift from branded drugs to generics weighed on reported sales. Perdue also cited impacts from a cyclospora outbreak and egg deflation, putting the combined effect of the headwinds at approximately 210 basis points to reported identical sales.
On margins, Perdue said the shift toward e-commerce and higher shrink reduced the gross margin rate, excluding fuel and LIFO. He said selling and administrative expenses were relatively flat in dollars, but the expense rate rose as identical sales declined.
Asked about price perception, Morris said Albertsons plans targeted price and promotional investments by market and category rather than a broad-based price reduction. She said the company is also accelerating work on its own brands, including their variety, quality and cost.
Morris said Albertsons is accelerating ACI Edge, which combined divisions into regions and centralized center-store merchandising. She identified purchasing, goods not for resale, administrative costs and store shrink as areas for further savings, and said the company plans to exit underperforming areas.
Asked about guidance, Perdue said the review could change the pace and mix of investments, cost reductions and portfolio actions. He said core business performance had not fundamentally changed from the second-quarter exit rate.
Guidance
Perdue said Albertsons was not guiding for the rest of the year while it reviews the pace and mix of investments, cost reductions and portfolio actions. He said the company plans to present a comprehensive plan and multi-year financial outlook by its fourth-quarter earnings call. Albertsons also plans an investor day in spring 2027.