Dive Brief:
- Albertsons Cos., which is planning a public stock offering of stock, reported negative sales figures in its fiscal third quarter, according to a financial filing last week.
- The company reported that for the quarter ending on Dec. 3, identical store sales at Albertsons stores decreased by 2.1%, and Safeway stores saw a 2.2% decline. Last year at this time, same-store sales at the those stores grew by 5.1% and 5.6% respectively — but those increases were helped by problems with competitors A&P and Haggen, according to Supermarket News.
- Over the first three quarters of the fiscal year, Albertsons saw sales come in at $45.9 billion, a 2.1% increase from the same period last year. Still, it’s reported a pro forma $116 million loss through the same time period, or a $408 million loss on an actual basis.
Dive Insight:
It wasn;t a good week for grocery store sales reports. Just a day earlier, Ahold Delhaize reported less-than-stellar numbers.
This isn’t a shock to the industry, however. Analysts have seen food price deflation in commodities such as meat, eggs and dairy take their toll on the grocery industry for more than a year. In fact, last year retailers saw an 11-month span of year-over-year sales declines, one of the worst periods of decline in close to 60 years.
According to the USDA, retail prices for beef, pork and poultry ended 2016 with decreases of about 7%, 4%, and 3% respectively. Analysts explain that declining food prices are a result of food retailers attempting to pass on cost savings to customers to gain a competitive edge. However, oncw a price deflation war starts, retail price decline can start to exceed the initial cost saving, hurting the overall sales and margin of retailers.
The good news for Albertsons is that it still achieved identical store sales growth on an overall basis and was able to maintain or increase its share in the food retail channel during the time of the three-quarter decline. That shows it’s not really losing customers to other channels and really just needs a turnaround in commodity prices to occur to see positive figures again. Most analysts think that will happen sooner rather than later.