New CEO Shares Vision for Albertsons

In his first public remarks since joining Albertsons Cos. as its new CEO three months ago, Vivek Sankaran pledged to run a company that would be “locally great and nationally strong,” saying the completion of the Safeway integration had laid the groundwork to elevate performance and leverage its scale.

While his remarks this week in Albertsons' first-quarter earnings call were relatively light on specifics—Sankaran told analysts his strategic plan was still under construction—he said to expect a “balanced” strategy, underpinned by technology, that would accelerate growth and productivity in stores and online. This, he said, would build on the modest momentum at the Boise, Idaho-based company, which is now riding six consecutive quarters of positive same-store sales and continuing to shore up financially with eyes on an elusive public stock offering.

“I have spent three months visiting stores, distribution centers, manufacturing plants plans and division and corporate offices, and have spoken to many customers, associates, vendor partners, bankers and analysts to understand our business and industry dynamics and our strengths and opportunities,” the former Frito-Lay executive said.

“I have come away very encouraged about our prospects to serve customers even better in stores and online and elevate our performance going forward. Overall, our goal remains to be the favorite local omnichannel supermarket that delights our customers with the freshest, high-quality products and meal solutions at a competitive price, and an outstanding customer experience,” Sankaran added.

Integration of numerous acquisitions over recent years, topped by the merger with Safeway, has left Albertsons in position to finally bring its scale to its local banners, which will be a key to realizing stronger performance, Sankaran said.

“In addition to being locally great, we now have the ability to be nationally strong,” he said. “We are going to build on this foundation and elevate the performance of our stores, accelerate our e-commerce, grow our loyalty programs, grow our own brands, strengthen partnerships with the supplier community and celebrate the diversity of the 270,000 front-line associates who delight our customers every day.

“Technology will underpin everything we do,” he continued. “We are building a robust and modern technology infrastructure and enabling our growth, productivity and talent agendas with new technologies.”

Technology will come into play in generating better productivity via the use of tech-enabled tools to address price, promotion, demand forecasting and replenishment; store technologies such as self-checkout; automation in warehouses; and supporting e-commerce, Sankaran said. 

Albertsons’ stores this year will also see an expansion of Drive Up & Go e-commerce at 600 locations; renovations at about 300 stores; and Instacart ordering at 2,000 stores. Own brands in the first quarter reached a company-best 25.3% sales penetration, but Sankaran said there is room to grow, with 600 new items due this year.

Sankaran also highlighted financial progress at Albertsons as it continues tackling debts, noting that the company had reduced its net-debt-to-EBITDA ratio to 3.3, thanks in part to recent sale-leaseback deals providing capital to pay down debt. Officials believe they can reduce the ratio to about 3 by the end of the year. That would help better position the privately held company to attempt another public stock offering, Chief Financial Officer Bob Dimond said.

Albertsons declined to provide financial guidance for the fiscal year, which disappointed some analysts participating in the call. Sankaran said the decision was related to ongoing work on a strategic plan that he said he would elaborate more on in the future.

“We’re considering a lot of different puts and takes in the business, and working as a management team with the board to develop a plan that will continue to accelerate growth, drive growth and productivity and serve our customers better, and we need some time for the plans to come together,” Sankaran said.