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Highlights

  • Albertsons stock fell 8% after issuing lower-than-expected full-year guidance, despite beating Q4 earnings estimates.

  • Management projects a third consecutive year of earnings decline, with 2025 EPS guidance below analyst expectations.

  • CEO transition may explain cautious outlook, as COO Susan Morris prepares to take the helm in May.

Shares of Albertsons Companies Inc. (NYSE:ACI) tumbled on Tuesday after the grocery chain released its fourth-quarter results and a cautious profit forecast for the year ahead.

The Boise-based grocer reported revenue of $18.8 billion for the fourth quarter, a 2.5% year-over-year increase, driven by a 2.3% rise in same-store sales — figures that were largely in line with Wall Street’s expectations. Adjusted earnings per share came in at $0.46, down 15% from the previous year, but still exceeding analyst estimates of $0.41.

However, it was the company’s full-year fiscal 2025 guidance that spooked investors. Management projected earnings between $2.03 and $2.16 per share, well below the consensus estimate of $2.28. If realized, the outlook would mark Albertsons’ third consecutive year of adjusted EPS decline, raising concerns about long-term growth momentum.

The company’s pharmacy business was a standout in the quarter, contributing to revenue growth, while digital and delivery services expanded by 24%. However, those bright spots come with caveats. Pharmacy revenues, while growing, tend to carry lower margins, and continued investments in online and delivery infrastructure put pressure on gross margins. Albertsons also maintained competitive pricing to retain market share, limiting its ability to offset rising operational costs through price hikes.

Some analysts are speculating whether the downbeat guidance may reflect more than just market challenges. Current CEO Vivek Sankaran is set to retire on May 1, with COO Susan Morris tapped as his successor. In such transitions, it’s not uncommon for companies to issue conservative forecasts, potentially giving incoming leadership room to outperform in future quarters.