Albertsons shoppers are turning away from one of the supermarket giant’s most profitable aisles, in a worrying sign for the already-battered grocery chain.
The Idaho-based company’s latest annual report shows produce sales have softened, even though the section has traditionally been one of the biggest money-makers for the grocery business, The Street reported.
Albertsons — which operates hundreds of stores across California — reported sales have softened. REUTERS Consumers are reportedly changing how they fill their carts — opting for longer-lasting staples versus fresh produce. Bloomberg via Getty Images The drop suggests customers are changing how they fill their carts, potentially swapping fresh fruit and vegetables for cheaper, longer-lasting staples as household budgets remain tight.
It’s a troubling shift for Albertsons, which operates more than 2,200 stores nationwide, including 581 stores in California — under brands such as Albertsons, Safeway, Vons and Pavilions.
The company’s overall sales rose 3.5% in its most recent fiscal year, but its profits told a much darker tale, according to the company’s annual report.
Operating income was cut in half after Albertsons’ blockbuster merger with Kroger collapsed, while net income plunged to $217.4 million, down from $958.6 million the year before.
The grocer’s long-term debt and other liabilities also climbed about 8% to over $8 billion, according to the annual report.
Albertsons has also been hit by legal troubles — last month, the company agreed to a $774 million settlement aimed at resolving opioid-related claims brought against it nationwide, the Wall Street Journal reported.
The company has increasingly leaned on its pharmacy business to drive growth, with pharmacy sales accounting for 13.7% of total revenue.
That leaves Albertsons increasingly dependent on its pharmacy business at a time when the rest of the company is under mounting pressure.
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