Shares of grocer Albertsons sank more than 20% on Thursday after the company lowered its fiscal 2026 outlook, citing softer demand and a more cautious consumer. The company said it is now “moving decisively” to invest in the customer experience because it believes that will improve its growth trajectory.
CEO Susan Morris said in a statement, “In the first quarter, our digital and pharmacy businesses continued to deliver strong growth, while core grocery faced increasing pressure from softer industry unit trends and a more cautious consumer.”
The company’s outlook cut comes amid broader signs that U.S. consumers have scaled back their grocery trips. Food inflation and tighter budgets due to high gas prices, among other factors, appear to be hurting spending.
For the full year, Albertsons said it now expects net income between $1.75 and $1.85 per share, down significantly from its previous expectation of between $2.22 and $2.32 per share.
It also lowered its adjusted EBITDA guidance to a range of between $3.55 billion and $3.625 billion, compared with a previous projection of between $3.85 billion and $3.925 billion.
For the first fiscal quarter of the year, the company reported that identical sales fell 0.8%. Albertsons reported net income of $84.7 million, or 17 cents per share, compared with $236.4 million, or 41 cents per share, in the year-ago period.
Morris said the company aims to “improve traffic, units, loyalty and the overall trajectory of the business over time.” This development may mean that consumers will have to adjust their shopping habits, potentially seeking more affordable options or reducing their spending on non-essential items.
The company’s decision to invest in the customer experience could be a strategic move to attract and retain customers in a competitive market. As Albertsons works to improve its growth trajectory, it will likely face challenges in balancing its efforts to enhance the customer experience with the need to maintain profitability, similar to how strong earnings forecast can impact stock performance.
They now expect identical sales to be in a range of down 1.5% to down 0.5%, compared with a previous expectation of flat to up 1%. The company’s revised outlook reflects the current market trends and consumer behavior.
As the company moves forward, it will be important to monitor its progress and adjust its strategies accordingly. Albertsons will likely continue to face challenges in the grocery market, but its efforts to invest in the customer experience and improve its growth trajectory may help it to stay competitive.
It will be a difficult road ahead.
