Albertsons Files for IPO, Shows Sales Growth

“We are proud of the progress we have made over the past few years, and believe we have a long runway for growth ahead of us."
Matthew HellerMarch 9, 2020

Albertsons has filed for an initial public offering as it seeks to finance growth in the highly competitive grocery store market.

The second-largest U.S. supermarket operator has been owned for the past 14 years by a group of investors led by private equity firm Cerberus Capital Management. According to The Wall Street Journal, an Albertsons IPO would be one of the biggest market debuts expected this year.

In its prospectus, Albertsons said same-store sales have grown for eight straight quarters, with a 2.7% in the third quarter of 2019, up from 1.9% a year earlier. For fiscal 2018, it made a profit of $16.9 billion on sales of $60.5 billion.

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“We are proud of the progress we have made over the past few years, and believe we have a long runway for growth ahead of us,” CEO Vivek Sankaran said.

Albertsons conceded, however, that it has a “significant amount of indebtedness” incurred when its owners reunited the old Albertsons chain in 2013 and then bought the larger Safeway chain in 2015. As of Nov. 30, it had $8.2 billion of debt outstanding.

The debt load could “place us at a competitive advantage compared to our competitors that have less debt,” the prospectus said.

Albertsons, Idaho’s biggest company, now operates 2,260 stores under its own banner as well as the Safeway, Vons, Pavilions and 16 other banners. Since 2015, it has spent about $6.8 billion on, among other things, remodeling stores and enhancing its digital and technology assets.

In the third quarter, sales from Albertson’s online home delivery and the Drive Up & Go pickup service rose 34%. “We plan to sustain our ecommerce growth through a number of initiatives,” including extending Drive Up & Go to 1,400 locations in the next two years, the company said.

Albertsons is also planning to increase sales penetration of its portfolio of private label brands from 25.6% in the third quarter of fiscal 2019 to 30%.

In 2018, Albertsons considered a $24 billion merger with Rite Aid that would have taken the company public but the deal fell apart amid investor pushback.