Grocery store company Albertsons Companies LLC has announced job cuts at its Phoenix location, contributing to the Arizona layoffs in 2018 thus far. The grocery store company’s Worker Adjustment and Retraining Notification (WARN) report says that the Albertsons layoffs will affect 76 employees. Recently, the store reported a decline in sales and gross profit margins in the third quarter of 2017.
Moreover, store foot traffic also decreased by 2.7% in the quarter, despite price cuts and promotions, though it has increased over the past month. According to Albertsons CEO Bob Miller, the company, “expected to see significant sales improvement as a result of price and promotional investments, but we experienced disappointing results from these investments.”
In January, Albertsons announced it was selling its 49% stake in Mexican grocery chain Casa Ley to Tenedora CL del Noroeste for $345.0 million. The Casa Ley stake was originally owned by Safeway, Inc. prior to its integration with Albertsons in 2015.
According to Miller, the company’s financials should improve over the course of the year..
Albertsons Reported Decline in Store Sales and Gross Profit Margin in 3rd Quarter
Albertsons’ quarterly results for Q3 were disappointing, with sales and gross profit margins seeing a drop of 1.8% and 26.7%, respectively. Total sales were flat for the quarter compared to the previous year’s sales of $13.6 billion. The company, which employs more than 280,000 employees and owns 2,323 stores under 21 banners across the U.S., has been experiencing losses since 2014. The main reason for this is Albertsons’ debt, taking on more and continuing to deal with the interest.
When Albertsons merged with Safeway, the company took on 1,325 stores, which added additional debt of $8.9 billion. For the current fiscal year’s first three quarters, Albertsons reported a net loss of $342.0 million and flat sales of $45.9 billion.
Many grocers, including Albertsons, have recently been facing low food prices. And while lower prices are good for consumers, they’re obviously bad for the businesses themselves. “Since 2016, we have seen unprecedented deflation in the grocery industry — the longest period in 60 years — and deflation typically drives a promotional environment,” said Bob Dimon, Albertsons’ chief financial officer.
“The supermarket business is pretty challenging for so many of the big companies.” said Bob Goldin, an analyst with the Chicago firm Pentallect. “And now with Walmart’s resurgence, it doesn’t make it easier.”
“WARN Info,” AZ Job Connection, January 5, 2018.
“Albertsons’ gross margin and same-store sales drop in Q3,” Food Dive, January 18, 2018.
“Albertsons, your friendly neighborhood grocery, is losing hundreds of millions of dollars,” Idaho Statesman, January 20, 2018.