With A Historic Merger Looming, Albertsons Reports Solid Earnings

There was a major shakeup in the supermarket industry last week when it was announced that two of the largest chains, Kroger and Albertsons, had agreed to a merger, per CNN. It's a historic deal, given that the two companies are both among the top 10 largest retailers in the U.S. The New York Times notes that Kroger will pay almost $25 billion to acquire Albertsons, although the merger likely won't be completed until 2024. That's assuming, of course, that the merger passes muster with the Federal Trade Commission, which could still block the deal.

In fact, two major political figures, Senators Elizabeth Warren and Bernie Sanders, have already suggested that the merger should be blocked, per CNN. The major pushback on the deal comes from concerns over market share. The two companies control around 5,000 combined supermarkets, according to The New York Times, and some fear the merger could result in higher prices during a time when food inflation is already a major issue for American consumers. The companies themselves, however, contend that the merger is necessary to compete — not only against Walmart, Amazon, and Costco, but also Aldi and Lidl, two European upstarts gaining a foothold in the U.S. market.

Meanwhile, amid all the uproar surrounding the merger, Albertsons has continued to post solid earnings.

Albertsons recently announced second quarter earnings for 2022, via a press release, and the company's performance should please shareholders. Notably, revenues were up over $1 billion relative to the same time period a year ago: $17.9 billion in 2022 versus $16.5 billion in 2021. Digital sales were one of several promising growth areas, as the company saw them spike by 36% during the fiscal second quarter, which ended on September 10. Albertsons' loyalty program also showed robust growth — rising 16% — as membership totals swelled to 31.8 million.

Albertsons currently owns over 2,272 supermarkets nationwide, including Safeway and Vons stores, according to the press release. It also operates over 400 gas stations. In fact, one of the more underrated aspects of the Kroger-Albertsons merger is that the two companies will not only control nearly 5,000 supermarkets and 4,000 pharmacies across the U.S., but also a combined 2,015 gas stations, per Convenience Store News. Fuel sales were another good revenue source for Albertsons during the second quarter, noted the company's press release. 

Albertsons actually credited inflationary price increases and an uptick in fuel sales as the primary reasons for their revenue gains relative to the same time period in 2021.