Albertsons pulled its financial forecasts on Tuesday, a notable move in the middle of a turnaround. The grocery chain said second-quarter net sales slipped to $18.9 billion, while identical sales fell 0.8%, a measure that excludes newly opened or closed stores.
It was the second quarterly drop in a row, following shrinking growth in the prior quarter. Albertsons operates its namesake stores and 21 other chains, including Safeway, Vons, Jewel-Osco, Tom Thumb, and Randalls.
The company said it is reviewing its strategy, cost structure, operations, and portfolio of brands under a plan called 'ACI Edge.' Chief executive Susan Morris announced the review in July. On Tuesday, Albertsons said it was pulling forecasts until that review is complete.
That signals a deeper overhaul than many investors may have expected. Meg Whitman, the newly appointed executive chair, joined last month and told analysts that 'everything should be on the table.' She also said, 'Dramatic improvement is needed now. Albertsons must move faster to change the trajectory of the business.'
Whitman does not bring grocery experience, but Albertsons hired her for turnaround work. She previously led Hewlett-Packard starting in 2011, where she simplified the company after the Autonomy Corp. acquisition, shifting strategy, trimming complexity, and overseeing a split into two companies. Before that, she ran eBay, where she professionalized management and operations during a period of growth.
Albertsons is under pressure from food inflation and higher gas prices, which have left many shoppers with less room for discretionary spending. Morris said, 'The reality right now is that the economy is tough for many of our customers.'
The retailer also carries a higher cost structure than rivals, giving it less flexibility on pricing than Walmart, Kroger, Sam's Club, and Costco. Lower-income customers are trading down to cheaper items and store brands, which squeezes margins or pushes shoppers elsewhere.
GlobalData managing director Neil Saunders called Albertsons' prices 'ridiculously high compared to rivals.' He said that would be only partly justified if 'store experience, service, private label, and so forth' were better, but added that they are not. Saunders said Albertsons would need to 'invest in prices,' meaning lower them, which would add pressure to find cost savings.
Whitman said the company may pursue 'potential strategic actions' and suggested there are no sacred cows. Morris had already reduced the number of operating regions to four from 11 and centralized much of merchandising under one team. Whitman’s role as executive chair is more hands-on, making her a close operations and strategic adviser to Morris.
For investors and shoppers, the message is plain: Albertsons is trying to become leaner while defending price competitiveness in a market that is punishing weak margins. Capital rewards clear rules, and grocery retail punishes companies that cannot move fast enough when costs rise and consumers trade down.
