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Albertsons (ACI) Soars 54% in a Year, Drives Omnichannel Space

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·4 min read
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Albertsons Companies, Inc. ACI seems well poised for growth, focusing on providing efficient in-store services, enhancing digital and omnichannel capabilities and boosting productivity. ACI has been directing its resources toward expanding digital and omni-channel capabilities as well as strengthening its delivery capabilities to better engage with consumers and provide them with a seamless shopping experience.

Buoyed by such endeavors, shares of this renowned food and drug retailer have surged 54.3% in a year’s time against the industry’s 30.3% plunge. A VGM Score of A coupled with an expected long-term earnings growth rate of 6.1% for this presently Zacks Rank #3 (Hold) stock further speaks volumes for its worth.

Let’s Delve Deeper

Albertsons’ efforts to boost assortments, especially in the fresh and Own Brands categories, bode well. ACI’s right assortment in each local market, loyalty program and ease of checkout through frictionless and contactless payments are consistently aiding in wooing customers. ACI, through its “just for U” loyalty program, has been impressively acquiring customers and retaining the old member for a while.

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During the fourth quarter of fiscal 2021, membership increased 18% from the last fiscal year’s comparable quarterly figure to reach nearly 30 million members. Also, the retention rate of active members, who redeemed fuel or grocery rewards, was more than 90% at the end of fiscal 2021. Management anticipates attaining the targeted $1.5 billion of annual gross savings by the end of fiscal 2022. Moreover, between fiscal 2023 and fiscal 2025, Albertsons estimated $750 million of savings in automation and digital tools, scalable workforce management, supply-chain modernization and SG&A optimization.

Additionally, Albertsons’ Own Brands products resonate well with its customers. Management remains committed to bringing in more innovative products to shoppers, focusing on brand development. During the fiscal fourth quarter, ACI continued to introduce Own Brands across all its banners while sales penetration reached 25.6%. Management informed that the sturdy performance was seen in the floral, deli and meat departments in the reported quarter.

Talking of its omni-channel endeavors, Albertsons’ unified mobile application, digital wallet, AI chat capability and expanded self-checkout installations elevate the customer shopping experience. ACI’s unified mobile application allows customers to shop, request pharmacy services, download deals, redeem fuel or grocery reward points and make payments.

Albertsons rolled out two digital offerings, namely Meal Planning and Schedule & Save. The Meal Planning digital tool offers a convenient and personalized way to plan meals and cook recipes developed by professional chefs and dieticians. The Schedule & Save feature enables auto-replenishment of grocery and household essentials at a discount. ACI also partnered with Afresh Technologies, whereby the former will use the latter’s AI-powered solutions to enhance its fresh offerings and help store associates better predict demand and monitor inventory position.

Albertsons recently expanded its partnership with Uber Technologies UBER to offer delivery services across more than 2,000 stores via Uber Eats. This move intends to add 800 stores, including Albertsons, Safeway, Jewel-Osco, ACME, Tom Thumb and Randalls. With this expansion plan, customers from Connecticut, Indiana, New Hampshire, Utah, Vermont and Rhode Island will now be able to order items found in ACI stores from the app.

Uber launched grocery delivery across the United States in 2020 amid the online boom resulting from the pandemic-led stay-at-home restrictions. Prior to this, Albertsons collaborated with Instacart for rush delivery and DoorDash to deliver prepared and ready-to-eat offerings.

Given all the aforementioned factors, Albertsons is likely to continue its momentum ahead.

Stocks to Consider

Some better-ranked stocks are Sysco Corporation SYY and McCormick & Company MKC.

Sysco, the marketer and distributor of food and related products, currently sports a Zacks #1 (Strong Buy). SYY has a trailing four-quarter earnings surprise of 3.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Sysco’s current financial-year sales and earnings suggests growth of 30.4% and 120.1%, respectively, from the corresponding year-ago period’s reported figures.

McCormick is one of the leading manufacturers, marketers and distributors of spices, seasonings, specialty foods and flavors. MKC presently carries a Zacks Rank of 2 (Buy).

The Zacks Consensus Estimate for McCormick's current financial-year sales and EPS suggests growth of 5% and 3.9%, respectively, from the corresponding year-ago period’s reported figures. MKC has a trailing four-quarter earnings surprise of 7.3%, on average.


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Albertsons Companies, Inc. (ACI) : Free Stock Analysis Report

McCormick & Company, Incorporated (MKC) : Free Stock Analysis Report

Sysco Corporation (SYY) : Free Stock Analysis Report

Uber Technologies, Inc. (UBER) : Free Stock Analysis Report

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