Albertsons Cos. is anticipating higher labor costs and “a more difficult consumer environment” in a new sign of caution from big US retailers.
(Bloomberg) — Albertsons Cos. is anticipating higher labor costs and “a more difficult consumer environment” in a new sign of caution from big US retailers.
The economic backdrop “is likely to be more challenging later in the year,” the grocer said in a statement Tuesday as it reported earnings. Albertsons said it’s also expecting to pay higher wages while contending with new inflationary cost increases.
The wary tone pointed to muted expectations as the company works to win regulatory approval for its $24.6 billion acquisition by Kroger Co. Citing the pending deal, Albertsons didn’t provide a profit and sales forecast for the fiscal year, which ends in early 2024. But its emphasis on the uncertain economic environment echoed comments earlier this year by Walmart Inc. and Target Corp.
Albertsons is still benefiting as high US inflation forces shoppers to spend more on essentials. In the fiscal fourth quarter, adjusted earnings rose to 79 cents a share, topping the 68-cent average of analyst estimates compiled by Bloomberg. Sales climbed 5.1% to $18.3 billion, while analysts had predicted $18.1 billion.
A 5.6% gain in comparable sales topped the 4.3% increase projected by analysts. But the company’s gross margin, a broad measure of profitability, fell almost a percentage point to 27.8%, pointing to cost pressures. Wall Street had estimated 28.4%.
The shares fell 1.4% at 9:55 a.m. in New York. Albertsons advanced 2.3% this year through Monday, while a Russell 1000 index of consumer-staples companies fell 1.1%.
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