Albertsons looked to boost online sales to help bottom line. Here’s how it’s working
Albertsons Cos. says its strategy for increasing online sales is working.
The Boise company on Wednesday reported online sales for the first quarter of its fiscal year ending June 15 increased 33%.
The company’s Drive Up & Go program, where customers place orders online and then pick them up at an Albertsons store, is now available at 300 of the chain’s 2,268 stores nationwide. That number is expected to double by the end of the fiscal year, CEO Vivek Sankaran said in an earnings call with investment analysts.
“Maximizing the growth of Drive Up & Go will require using a combination of our own operations and people and continued enhancement of customer applications to be more efficient and user-friendly,” Sankaran said.
Albertsons’ also offers a grocery delivery service using both its own trucks and through a partnership with Instacart and available at more than 2,000 stores under Albertsons and other company banners. It allows customers to order groceries online and have a shopper pick up the items from a store and deliver them in as little as an hour.
Both online services are available to Albertsons customers in the Treasure Valley. Instacart handles the rush orders, Albertsons spokeswoman Chris Wilcox said.
Drive Up & Go recently began sending text messages to customers to let them know when their orders are ready for pickup, Sankaran said.
For the quarter, Albertsons reported net income of $49 million. During the same quarter a year ago, the chain reported a loss of $17.7 million.
At the same time, Albertsons announced it reduced its debt by nearly $1 billion during the quarter.
The 33% increase in digital and e-commerce sales and a 1.5% increase in same-store sales helped fuel the improved performance. It was the sixth straight quarter where same-store sales, which do not include stores open less than one year, increased.
The earnings report marked the third straight quarter of profitability. The improvement is good news for Idaho’s biggest company, which suffered hefty losses from 2014 through the middle of 2017. Albertsons also showed losses in the first two quarters of fiscal year 2018.
Albertsons reported $60.5 billion in sales for the 52 weeks ending Feb. 23. The company has 280,000 employees, of which 4,700 are in Idaho.
Sankaran didn’t speak about it, but Albertsons is testing a subscription program at a dozen stores in Phoenix and Southern California with options for monthly or annual billing. The company hopes to increase customer loyalty and lead them to order more groceries.
Kenji Gjovig, an Albertsons vice president of e-commerce marketing and merchandising, told attendees at a digital food and beverage conference last week in Austin, Texas, that the company plans to expand the program after seeing “off the charts” results in the test markets since March, reported Grocery Dive, an industry news website.
The earnings call with industry analysts was the first since Sankaran took over as CEO April 25. He said he has spent the past three months visiting stores, distribution centers, manufacturing plants and division offices.
Sankaran came to Albertsons after spending a decade at Frito-Lay. He said he has spoken with customers, employees, product partners, bankers and analysts to better understand the company and the grocery industry.
“I’ve come away very encouraged about our prospects to serve our customers even better in stores and online,” he said. “Our goal remains to be the favorite local supermarket that delights our customers with the freshest, high-quality products and meal solutions.”
Albertsons has long suffered because of large debt obligations incurred when its owners, an investment consortium led by New York’s Cerberus Capital Management, reunited the old Albertsons Inc. chain in 2013 and bought the larger Safeway chain in 2015.
In 2017, Albertsons Cos. had more than $12 billion in debt. At the end of the latest quarter, debt was down to $9.8 billion.
During the quarter, Albertsons received $886 million from the sale of the property for 50 stores and a distribution center. The company leased back those properties for $50 million annually under leases that will run for 15 to 20 years. Albertsons plans to use the proceeds to pay off additional debt.
This story was originally published July 24, 2019 at 1:41 PM.
