Albertsons Companies reported identical sales growth of 2.7% for Q3 2019, marking the retailer’s eighth consecutive quarter of identical sales growth. In total, sales and other revenue increased 1.9% to $14.1 billion during the quarter with store closures offsetting some of the ID sales gain. Profit was also strong for the retailer. Gross profit margin increased 40 basis points compared to the Q3 2018, mainly due to improved product mix, including increased Own Brands penetration and lower shrink expense.
Similar to recent quarters, highlights for Albertsons’ business included Own Brands and eCommerce. Own Brands sales penetration reached a new high of 25.6%, contributing to profitability for the quarter by helping to establish Albertsons’ banners as go-to places for items shoppers can’t find elsewhere. Albertsons has long had strength with its more premium brands, O Organics and Signature Select, showcasing a broader trend in the grocery channel where shoppers trust and even expect quality and unique items. This will be a hot topic in 2020, as retailers grow the shelf space they dedicate to private label, often with items shoppers deem as more unique than national brands.
In addition to Own Brands, eCommerce was a continued bright spot for Albertsons. Online home delivery and Drive Up and Go sales grew 34%. We have come to expect online sales growth of over 30% from grocery retailers in the past few years. This will be a metric to pay close attention to as we head into 2020. Growth rates will most likely be sustained now that the online grocery base is larger; grocers will still need to invest in their digital capabilities as shopper expectations grow and they have more options to fulfill their online grocery needs.
Looking ahead to the final quarter of Albertsons Companies’ 2019 fiscal year, it is reassuring to see that store closures of (assumingly) unproductive stores are giving way to more positive comps. That said, Q3 closed on Nov. 30, so it remains to be seen how Albertsons faired during the majority of the holiday season.