Albertsons Companies, Inc.

Q1 identical sales declined 0.8%. Adjusted EBITDA was $1.013 billion and adjusted EPS was $0.42 per diluted share. Gross margin was 26.6%, down 23 basis points year over year excluding fuel and LIFO, and the SG&A rate excluding fuel increased 42 basis points year over year. On the cash/capital side, Q1 interest expense rose to $167 million from $142 million, capex was $522 million, and the company returned more than $300 million to shareholders. For fiscal 2026, Albertsons now expects identical sales of negative 0.5% to negative 1.5%, or 0% to 1% excluding the expected 150 basis point pharmacy IRA headwind; adjusted EBITDA of $3.55 billion to $3.625 billion; adjusted EPS of $1.75 to $1.85; tax rate of 24% to 25%; and capex of $1.9 billion to $2.0 billion.

Susan Morris framed the quarter as an execution miss and responded with a broad strategic reset centered on the ACI Edge, which simplifies the company into 4 regions and centralizes center-store merchandising. Her tone was urgent but constructive: she said the goal is to improve traffic, units, loyalty, store standards, fresh execution, and the overall trajectory of the business, even if that pressures near-term earnings. She repeatedly emphasized that the company is being surgical rather than making broad-based price cuts, using data, AI, and local market knowledge to sharpen the value proposition.

Sharon McCollam said Q1 performance fell short and quantified the main pressures: identical sales down 0.8%, with about 100 basis points of IRA impact and 50 basis points from deflation; excluding those headwinds, identical sales would have been up about 0.7%. She noted gross margin of 26.6% was down 23 basis points year over year excluding fuel and LIFO, while the SG&A rate excluding fuel rose 42 basis points, driven by rent and occupancy, merger-related litigation, transformation costs and depreciation. She also highlighted $522 million of Q1 capex, more than $300 million returned to shareholders, net debt to adjusted EBITDA of 2.3x, and full-year guidance lowered to reflect continued unit pressure and higher customer-value investment.

Analysts focused on the new price-investment strategy, whether Albertsons might consider strategic alternatives, the centralized merchandising rollout, unit trends, and gross margin pressure. Management said the price actions are targeted market-by-market and category-by-category, not a move to EDLP, and that the board considers shareholder value broadly but strategic alternatives were not the main discussion. On operations, Susan said center-store centralization is already underway and should be complete in spring/early summer next year, while Sharon said back-half unit improvement should be only modest and that pharmacy will face tougher comparisons as the year progresses.