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Albertsons (ACI) is trading lower after reporting Q3 (Nov) results this morning, reaching new multi-year lows. The grocer beat EPS expectations while revenue was roughly in line, increasing 1.9% yr/yr to $19.12 bln. The company also slightly lowered/narrowed its full year guidance, now expecting ID sales growth of 2.2%-2.5% (prior 2.2%-2.75%) and adjusted EPS of $2.08-$2.16 (prior $2.06-$2.19), citing a mixed consumer backdrop and the impact of U.S. drug-pricing changes on reported pharmacy sales.

• ID sales saw modest sequential improvement, increasing +2.4%, which is inclusive of a 10-20 bps headwind due to the government shutdown and delayed SNAP funding.
• Separately, yr/yr unit trends also improved sequentially, supporting management's view that its pricing actions are helping support demand in a still value-focused environment.
• It saw continued strength across its growth drivers, with digital sales increasing 21% yr/yr and pharmacy and health sales increasing 18% as e-commerce penetration continued to build and pharmacy momentum was supported by immunizations, GLP-1 therapies, and core prescriptions.
• In terms of the consumer, it noted that at the low-end, consumers are stretched, prioritizing essentials with more frequent trips; middle-income consumers are showing some signs of softening with trade-down behavior in certain categories; and high-end consumers remain largely stable, but are still increasingly conscious of price and value.
• The guidance change to ID sales and adj. EPS largely reflects the inclusion of the Medicare drug price negotiation program (effective Jan. 1, 2026). Importantly, while this will weigh on pharmacy and ID sales, management expects the profitability impact to be near neutral, noting no impact to adj. EBITDA from the price change and essentially reaffirming the midpoint ($3.825-$3.875 bln vs. prior $3.8-$3.9 bln).

Briefing.com Analyst Insight

While ACI certainly had some bright spots in Q3, particularly the sequential improvement in ID sales, better unit trends tied to targeted price investments, and continued momentum in digital and pharmacy, the negative reaction likely reflects the still-challenging consumer backdrop and the slightly lowered outlook tied to Medicare drug-pricing changes. The impact on profitability is expected to be near neutral, but it adds another variable for investors to weigh. In that context, investors may want clearer evidence that ACI's targeted value actions, loyalty, personalized promotions, selective price investments, and enhanced digital tools, can translate into durable unit momentum.