By Ananya Mariam Rajesh
(Reuters) -Albertsons executives focused on moving on from its scuttled merger with Kroger (NYSE:KR) on Wednesday, as the supermarket chain raised its profit forecast and its CEO talked up investments meant to weather competition from bigger retailers.
The company, which sued Kroger in December after the $25 billion deal was terminated, is looking to build its digital sales and retail media business to pull in shoppers to fend off competition from bigger retailers like Walmart (NYSE:WMT) and Kroger that have taken market share.
CEO Vivek Sankaran acknowledged in the company’s first post-earnings call in more than two years that a mass retailer and a club retailer are growing much faster, and Albertsons (NYSE:ACI) must compete with them and perform better to gain market share overall.
“A lot of the big box retailers have media businesses and they’re leveraging the data that they have, using generative AI to harness and understand it better and then to target the marketing to consumers better,” Telsey Advisory Group analyst Joseph Feldman said.
Albertsons is also turning towards its retail media business to run targeted media campaigns and increase customer spend and is looking to deliver $1.5 billion in savings over the next three years, Sankaran said on the call.
The grocer and Kroger could turn to fast-growing and profitable advertising ventures to tackle the competition and generate advertising revenue from big food companies and consumer product makers, analysts said in December.
Albertsons now expects fiscal 2024 identical sales growth in the range of 1.8% to 2.0%, compared to a prior forecast of 1.8% to 2.2%.
Its third-quarter net sales rose 1.2% to $18.78 billion, missing analysts’ estimate of $18.82 billion, according to data compiled by LSEG. It reported adjusted profit of 71 cents per share, but beat an expectation of 66 cents.
Albertsons now sees annual adjusted profit of $2.25 to $2.31 per share, compared to the previously forecast $2.20 to $2.30.
Shares of the grocer rose 1.2% in early trading.