Kroger, Albertsons well-positioned to defend market share - Goldman Sachs

Published 02/04/2025, 08:15 AM
© Reuters.

Investing.com - Albertsons (NYSE:ACI) and Kroger (NYSE:KR) are both well-positioned to defend their market share in the current environment of food-at-home price inflation of between 1% to 2%, according to analysts at Goldman Sachs.

In a note to clients reinstating their ratings of North America's two largest traditional supermarket chains at "buy", the analysts added that small or independent grocers are more at risk of share losses due to competition from low-cost competitors.

Meanwhile, the wider U.S. grocery industry is tipped to expand at 3% to 4%, in-line with long-term trends, the analysts noted.

Against this operating backdrop, Albertsons and Kroger both offer a "compelling blend of value and convenience for customers" through their scale, private label options, loyalty programs, omnichannel footprint and retail media, they said.

Taken individually, the analysts argued that Albertsons, despite recently increasing some investment spending, has a "discounted" valuation and an "attractive risk/reward set-up".

Kroger, meanwhile, is expected to roll out top-line and margin initiatives to support growth, the analysts said, adding that the business is "now past peak pressure" from recent e-commerce expenditures.

"Moreover, looking across our coverage of food retail and packaged food, we view food retailers (especially [Albertsons] and [Kroger]) as better positioned to benefit from key industry themes, including a slight reacceleration in food-at-home inflation, consumption shifts toward fresh and private label, and the balance of power shift toward retailers," the analysts wrote.

The comments come after a U.S. judge blocked a pending $25-billion merger between Kroger and Albertsons in December, in a decision that Kroger said would likely end the deal. The Federal Trade Commission argued that the tie-up would push up prices for shoppers and dent bargaining leverage for unionized workers.

Spokespeople for Albertsons and Kroger said they were disappointed by the ruling, Reuters reported.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2025 - Fusion Media Limited. All Rights Reserved.