This is what Boise’s Albertsons foresees as inflation puts pressure on grocery shoppers

Albertsons is bracing for less spending by lower-income customers as U.S. food prices extend their upward march.

The Boise, Idaho-based supermarket operator sees food inflation remaining at elevated levels at least through September, adding to the challenges facing the supermarket industry. Grocers are also contending with rising labor costs and supply-chain snarls that have led to empty spaces on shelves.

The company expects demand for private-label goods to grow as bargain hunting intensifies.

Shoppers who depend on the Supplemental Nutrition Assistance Program, commonly referred to as food stamps, are likely to react to higher prices by buying less or switching to cheaper products, Albertsons CEO Vivek Sankaran says.

“As we go through the second half, we have assumed that the consumer who was depending on SNAP will spend less, and they may spend less just by trading down,” Sankaran said on a conference call to discuss the grocer’s latest financial results. “But we haven’t seen that in any of our segments to date.”

Another headwind is an expected decline in COVID-19 vaccinations, which in recent quarters have boosted sales by enticing more people inside stores, Albertsons said.

Adjusted earnings will fall to between $2.70 and $2.85 a share in the fiscal year ending early next year, the company said April 12. If that forecast turns out to be right, it would represent the company’s second straight annual decline in adjusted earnings after a bonanza for grocers during the first year of the coronavirus pandemic.

But Sankaran said he is pleased with the company’s latest earnings.

“Our strategy is working, and we are executing well against industry-wide pressures,” Sankaran said in a news release.

The company reported that same-store sales rose 7.5% in the quarter that ended Feb. 26 compared with the same quarter a year earlier. For its fiscal year, which also ended Feb. 26, the company reported a same-store sales decrease of 0.1% to. Same-store comparisons exclude sales changes caused by store openings and closings.

Overall sales rose to $17.4 billion for the quarter, up from $15.8 billion a year earlier. Sales for the full year totaled $71.9 billion, up from $69.7 billion the year before.

Albertsons is the largest company based in Idaho, with 290,000 employees nationwide and nearly 2,300 stores under assorted banners, including the chain for which it is named.