(Reuters) -Albertsons forecast annual profit below estimates on Tuesday as the company offers selective discounts and invests in its loyalty program to drive sales while inflation pressures consumer spending, sending its shares down 7% in premarket trading.
Retailers are tempering their annual expectations due to the overarching effects of President Donald Trump’s sweeping tariffs, which have sparked recession fears and weakened consumer sentiment.
Although Albertsons has limited exposure to imports from countries such as China, Canada and Mexico, weak spending from consumers could weigh on its sales through the year.
Albertsons has invested heavily in store remodeling and its private label brands, apart from its lower-margin pharmacy business and loyalty program, to drive sales.
The company, which is being counter-sued by Kroger after their botched $25-billion merger, expects annual profit of $2.03 to $2.16 per share, compared with an estimate of a 0.5% decline to $2.28 per share, according to data compiled by LSEG.
The Boise, Idaho-headquartered company named insider Susan Morris its CEO in March, effective May 1, to replace Vivek Sankaran as it moves on from the now-terminated merger with bigger rival Kroger.
Fiscal 2025 will be an “investment year,” Morris said in a statement and added that the company expects to drive sales and core profit growth in line with its long-term expectations from fiscal 2026.
Capital expenditures for fiscal 2024 were $1.93 billion as the company completed 127 store remodels and opened 11 new ones.
For the fiscal year ending February 2026, Albertsons expects capital expenditure in the range of $1.7 billion to $1.9 billion.
It is also investing in its digital sales and advertising business to increase profitability. Retail bellwether Walmart has been able to grow operating profits via similar alternate revenue streams.
Excluding items, the Safeway-parent reported fourth-quarter profit per share of 46 cents, beating an estimate of 40 cents. Its quarterly revenue of $18.80 billion was in line with Street expectations.
(Reporting by Juveria Tabassum in Bengaluru; Editing by Pooja Desai)
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