BOISE, Idaho - Albertsons Companies , Inc. (NYSE: NYSE:ACI), a $10.7 billion market cap retailer with an annual revenue of $79.7 billion, announced the termination of its merger agreement with Kroger following court injunctions against the proposed union. The U.S. District Court in Oregon and the King County Superior Court for the State of Washington blocked the merger on December 10, 2024. According to InvestingPro analysis, Albertsons maintains a GOOD financial health score, suggesting resilience despite the merger setback.
Vivek Sankaran, CEO of Albertsons, expressed disappointment over the court decisions but emphasized the company's strong financial position and ongoing investments in core business, new revenue sources, and technology. The company's "Customers for Life" strategy aims to drive long-term value and shareholder returns through various initiatives, including enhancing customer value propositions and investing in stores, technology, associates, and communities. InvestingPro data reveals the company's solid profitability metrics, with a gross profit margin of 28.4% and an attractive P/E ratio of 11.05, suggesting efficient operations.
Albertsons anticipates identical sales growth of over 2% in the long term, with adjusted EBITDA growth outpacing sales growth. For fiscal 2024, the company projects identical sales growth between 1.8% and 2.2%, adjusted EBITDA between $3.90 and $3.98 billion, and adjusted net income per share between $2.20 and $2.30.
The Board of Directors plans to increase the quarterly cash dividend by 25% from $0.12 to $0.15 per share, starting with the next declaration, bringing the dividend yield to 2.59%. A new share repurchase program of up to $2 billion, inclusive of existing authorization, has also been authorized. These capital return initiatives are expected to be funded by cash from operations. For deeper insights into Albertsons' valuation and growth potential, including additional ProTips and comprehensive financial analysis, visit InvestingPro.
Jim Donald, Board Chair, praised the leadership team's transformative efforts and expressed confidence in their ability to drive long-term stockholder value. Cerberus Capital Management, L.P., Albertsons' largest shareholder, reaffirmed its support and confidence in the company's standalone strength and its significant undervaluation in the current trading range.
Albertsons operates 2,267 retail food and drug stores across the United States, with a commitment to making a meaningful difference in communities. In 2023, the company and its foundation contributed more than $350 million in food and financial support.
This financial update is based on a press release statement from Albertsons Companies, Inc. The company's forward-looking statements are subject to risks and uncertainties, including changes in macroeconomic conditions, consumer behavior, competition, supply chain challenges, and potential cyber incidents. Albertsons cautions that actual results could differ materially from those projected due to these risks.
In other recent news, Albertsons Companies, Inc. has terminated its merger agreement with Kroger Co (NYSE:KR). after injunctions from the U.S. District Court in Oregon and the King County Superior Court for the State of Washington. Despite this setback, Albertsons' CEO emphasized the company's strong financial condition and hinted at further details to be disclosed in an upcoming earnings conference call. Albertsons' largest shareholder, Cerberus Capital Management, reaffirmed its confidence in the company, indicating no plans to sell its shares.
Albertsons is forecasting identical sales growth of 1.8% to 2.2% for fiscal 2024, with adjusted EBITDA between $3.90 and $3.98 billion, and adjusted EPS of $2.20 to $2.30 per share. Meanwhile, RBC Capital Markets has reduced Albertsons' price target from $22.00 to $21.00, maintaining an Outperform rating on the stock. The adjustment follows the court's decision to halt the merger between Albertsons and Kroger.
In other developments, Albertsons has seen significant changes to its Board of Directors, with Jim Donald assuming the role of independent Chair and Stephen Feinberg, co-founder of Cerberus Capital Management, joining as a Board member. These changes follow the resignation of Chan Galbato from his position on the Board. Albertsons has also reported a year-over-year decline of 18% in its second quarter fiscal year 2025 earnings, despite surpassing earnings per share forecasts, and declared a quarterly cash dividend of $0.12 per share of common stock.
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