Albertsons Pulls Fiscal 2026 Guidance for Business Review as Profit Falls to $51.5 Million

Albertsons beat adjusted expectations in its fiscal second quarter on Tuesday, then told investors to stop relying on its forecast: the grocer is withholding any updated outlook until a sweeping review of its costs, banners and capital plans is finished in the fourth quarter.

The earnings themselves were not the surprise. Adjusted earnings of $0.36 a share beat the $0.33 FactSet estimate compiled by the Wall Street Journal, and revenue of $18.89 billion edged past the $18.87 billion estimate. On the standing surprise formula, that is a 9.1% adjusted earnings beat on a revenue beat of about 0.1% — a modest outperformance, not a blowout, and one the company itself declined to celebrate.

A beat that did not settle anything

Chief executive Susan Morris said the quarter landed in line with the company's revised outlook but that the results do not reflect the company's potential. Her sharper point was about costs: the review will tackle a cost structure the company says it can no longer afford. That framing matters more than the beat. A grocer that tops a lowered bar and then pulls its forecast is telling investors the problem is structural, not a single soft quarter.

Albertsons is no longer providing a fiscal 2026 outlook and will not provide an updated outlook until the comprehensive business review is completed during its fourth quarter. In place of guidance, the company promised a refreshed financial framework, covering both the short and long term, alongside a comprehensive turnaround plan by its fourth-quarter earnings call, and an investor day in the spring of 2027.

Sales slipped even as digital and pharmacy held up

Net sales and other revenue were $18.89 billion in the 12 weeks ended September 12, 2026, down 0.1% from $18.92 billion a year earlier. Identical sales fell 0.8%, slightly better than the 0.9% decline analysts had expected. Digital sales rose 11% and pharmacy sales grew despite headwinds from federal drug-pricing changes, while higher fuel sales partly offset the identical-sales decline.

The mix tells the underlying story. The two businesses Albertsons is investing in most heavily — digital ordering and pharmacy — grew, while the core in-store grocery business shrank. That is a workable direction only if the growing pieces eventually carry better margins than the ones they are replacing, and on this quarter's evidence they do not yet.

Margins narrowed and impairments weighed on profit

Net income was $51.5 million, or $0.11 a share, down from $168.5 million, or $0.30 a share, a year earlier. Adjusted net income was $179.0 million, or $0.36 a share, down from $248.4 million, or $0.44 a share. Adjusted earnings before interest, taxes, depreciation and amortization were $784.0 million, or 4.1% of sales, down from $848.4 million, or 4.5% of sales.

The gross margin rate was 26.8%, down from 27.0%, and excluding fuel and last-in, first-out expense it fell 17 basis points, as delivery and handling costs tied to digital growth and higher shrink outweighed an improvement in pharmacy margins. Selling and administrative expenses rose to 25.6% of sales from 25.4%, which the company attributed to sales deleveraging and higher merger-related litigation costs.

Two below-the-line items widened the profit drop. The net loss on property dispositions and impairments was $42.4 million, up from $4.4 million a year earlier, driven by store impairments. Net interest expense was $125.0 million, up from $105.3 million, on higher average borrowings. Income tax expense was $11.2 million, a 17.9% effective rate, down from a 23.3% rate a year earlier.

The review reaches across the whole business

The review covers customer strategy, cost structure, operating model, the portfolio of banners, markets, assets and businesses, and capital allocation priorities. That is close to the entire company: Albertsons operates 2,240 stores across 35 states and the District of Columbia under 22 banners. Nothing in that list is cosmetic, and the portfolio language in particular leaves open store, banner or asset decisions the company has not yet specified.

The first step came on July 23, 2026, when the company realigned its operating structure under the name ACI Edge, consolidating 11 divisions into four regions and centralizing center-store merchandising. Management presents that move as step one of the turnaround rather than the turnaround itself, which is why the fourth-quarter plan, not Tuesday's release, is the document investors will judge.

Capital returns continued alongside the reset. Capital spending in the first 28 weeks was $899.6 million, funding 38 remodels and seven new stores. The company repurchased 26.0 million shares for $387.6 million in the first 28 weeks, paid a $0.17 quarterly dividend on August 7, and declared the next $0.17 dividend payable November 6 to holders of record on October 23. Whether that pace survives the review's capital-allocation conclusions is one of the open questions the pulled guidance leaves behind.

Kroger litigation runs alongside the reset

The review lands a day after Albertsons sued Kroger seeking more than $9.3 billion over the failed $24.6 billion merger, a case TickerGrove covered on Monday. The litigation and the turnaround are separate tracks, but they compete for the same management attention and the same legal budget — the release itself counts higher merger-related litigation costs among the quarter's expense pressures. A grocer trying to cut a cost structure it calls unaffordable is simultaneously funding one of the largest damages claims in grocery history.

What investors are waiting for now

Management discusses the quarter on a conference call today at 8:30 a.m. Eastern Time, hosted by Morris and interim chief financial officer Cody Perdue. No share-reaction claim belongs in this story yet: the release arrived before the market open and the call had not happened at publication. What remains unknown is the substance of the review itself — which costs, banners or assets are in scope, what the refreshed framework will target, and whether capital returns change once it lands.

A note on sourcing: the sales, earnings, margin, expense, impairment, interest, tax, capital-spending, dividend and buyback figures, and every statement about the withdrawn outlook and the business review, are Albertsons' own figures and statements in its October 13 release, read in full through a Business Wire republication. The consensus estimates are FactSet figures reported by the Wall Street Journal before and alongside the release.