Albertsons reveals performance details in IPO filing

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Albertsons reveals performance details in IPO filing

By Mike Troy - 03/09/2020

Easy, exciting and friendly is the value proposition Albertsons describes in a registration statement related to a planned public stock offering that reveals a company whose improving performance is helping pay off a huge debt burden.

Albertsons is one of the nation’s largest food retailers with a base of 2,260 stores operating under 20 different banners in 24 states generating annual sales of more than $60 billion, according to the company’s registration statement filed with the Securities and Exchange Commission.

“Our stores operate in First-and-Main retail locations and have leading market share within attractive and growing geographies. We hold a number one or number two position by market share in 66% of the 121 metropolitan statistical areas in which we operate,” Albertsons said in its filing. “Our portfolio of well-located, full-service stores provides the foundation of our omni-channel platform, including our rapidly growing Drive Up & Go curbside pickup, home delivery and rush delivery offerings. We seek to tailor our offerings to local demographics and preferences of the markets that we operate in.”

The company describes its value proposition as being easy, exciting and friendly and also noted that it plans to add 10 new micro-fulfillment centers in the next two years to the two locations it currently operates.

“We make life easy for our customers through a convenient and consistent shopping experience across our omni-channel network. Merchandising is at our core and we offer an exciting and differentiated product assortment. Our friendly service is embedded in our culture and enables us to build deep ties with our local communities,” according to Albertsons.

The filing also paints a picture of a company with a wide range of strategic initiatives in place that are contributing to an improved financial performance and the ability to reduce a debt load which stands at $8.75 billion.

“We continue to sharpen our in-store execution, increase our own brands penetration and expand our omni-channel and digital capabilities. We have invested substantially in our business, deploying approximately $6.8 billion of capital expenditures beginning with fiscal 2015, including the $1.5 billion we expect to spend in fiscal 2019,” according to Albertsons. “We used that capital to remodel existing stores, opportunistically build new stores and enhance our digital capabilities. We have also developed and begun to implement specific productivity initiatives across our business that target $1 billion of annual run-rate productivity benefits by the end of fiscal 2022 to help offset cost inflation, fund growth and drive earnings.”

The company also points to an enhanced management team that includes, most notably, CEO Vivek Sankaran, who joined the company from PepsiCo in April 2019. The company also recently added Chris Rupp as chief customer and digital officer and Mike Theilmann as chief human resources officer.

What prospective investors will care most about is the company's improving financial performance, including eight consecutive quarters of accelerating identical store sales growth which contributes to improve expense leverage and increased profitability.

“We realized strong financial performance in fiscal 2018, generating net sales of $60.5 billion, adjusted EBITDA of $2.7 billion and adjusted free cash flow of $1.4 billion,” according to the company. “Adjusted EBITDA grew from $2.4 billion in fiscal 2017 to $2.7 billion in fiscal 2018 and we generated a cumulative $6.3 billion in adjusted free cash flow since the start of fiscal 2015. The momentum we are experiencing gives us confidence that our easy, exciting and friendly  identity resonates with customers. We believe our strategic framework will enable us to continue delivering profitable growth going forward.”