Boise, ID — Albertsons’ private label organic product sales and its partnership with Instacart helped deliver some good news for the retailer on its quarterly earnings call.
Robert Miller, Albertsons chairman and CEO, told analysts during the conference call that 12-month sales of its O Organics private label line exceeded $1 billion for the first time. Overall, private label penetration increased by 62 basis points in the third quarter.
Miller also cited the company’s partnership with Instacart, as contributing to positive traffic in the first few weeks of the fourth quarter, leading the company to be optimistic about its prospects for the year ahead.
Albertsons will roll out online grocery ordering and delivery at 1,800 of its stores by mid-2018 with technology provided by Instacart. Miller said this would supplement its ecommerce efforts, which include developing home delivery and click-and-collect options at stores.
But the news wasn’t all positive for the retailer.
Sales were flat at about $13.6 billion in the quarter. The 1.8% decline in same-store sales included a 2.7% decrease in traffic, partially offset by a 0.9% increase in average basket.
“During the third quarter we expected to see significant sales improvement as a result of price and promotional investments, but we experienced disappointing results from these investments as our identical-store sales for the third quarter matched the second-quarter decline,” Miller said.
He said the company has since adjusted its promotional strategy to focus on certain key markets, rather than investing heavily across the entire organization, and the effort seems to be driving improved sales and traffic.
For the 12-week period, which ended Dec. 2, the retailer’s net income totaled $218.1 million after a tax benefit of $523.5 million. The operating loss for the quarter was $95 million, compared with operating income of $153.9 million in the year-ago third quarter.
Gross profit margin decreased to 26.7% of sales for the quarter, compared with 28.1% in the year-ago period. Excluding the impact of fuel, gross profit margin decreased 130 basis points. The decrease was largely the result of the aggressive promotions and shrink, the company said.