Albertsons Companies, Inc. Class A

Q4 2021 Earnings Conference Call


spk_0: welcome to the albertsons companies fourth quarter and fiscal year two thousand twenty one ernie safran foer and thank you for standing by or producers will be an emotionally mode until the queue in a session scholars being recorded i will have to hand the call of or to melissa places senior vice president investor relations treasury and risk management please go ahead
spk_1: good morning and thank you for joining us for the albertsons company fourth quarter and fiscal year twenty twenty one earnings conference call with me today are vexing grin our ceo and sharon mccullum our president and cfl today the that will share insights into our fourth quarter results as well as review our progress against our strategic priorities sharon will then go into the financial details before the vac and sarah and provide a discussion on our priorities and outlook for fiscal twenty twenty two i would like to remind you that management may make statements during this call that are or could include bored looking state mintz within the meaning of the federal security flaws forward looking statements are not limited to historical facts but contain information about future operating or financial performance forward looking statements are based on our current expectations and assumptions and involved risks and uncertainties that could cause actual results or events to be materially different from those anticipated additional information concerning factors that could cause actual results to differ materially from those in the forward looking state as our and will be contained from time to time and or se si filings including on for ten q ten k and eight k forward looking statements we make today are only as of today's date and we undertake no obligation to update or revise any such statements as a result of new information theater events or otherwise please keep in mind that included in the financial statements and management's prepared remarks are certain non gap measures and historical financial information includes a reconciliation of net income to adjusted net income and adjusted ebitda and with that i will hand the call over to the back
spk_2: thanks multiple good morning everyone and thanks for joining us today the the fourth quarter or teams continue to drive top fuel operating financial performance we want to recognize and thank all of our retail distribution and manufacturing themes for their commitment to and care of our customers and their communities we're proud of the compassion humility and passion for excellence they have shown in an exceptionally challenging environment over the last two years would you put twenty one i sales increase seven point five percent and nineteen point three percent want to your stuck we also good unit and dollar market share and food and new low on bought a one and two your bases and maintained on number one or number two position and sixty eight percent of the under toy one embassies in which we operate in addition to delivered adjusted ebitda of approximately one point one billion dollars and adjust adjusted dps pop seventy five cents per share well ahead of our expectations during the quarter we continue to see a rebound in store traffic and the benefits from a digital on the channel investments including the expansion of drive up and go and additional michael fulfillment centers bringing our total of to seven only channel households spent three times more than install only shoppers a during que for on the general households grew by nearly five times per the fourth quarter of twenty nine team in addition as or investments to have increased costs would engage with the detention few for twenty one digital sales increase five percent year over year or two hundred and eighty seven percent on the to yourself basis in the just for your loyalty program benefit enhancements continued to accelerate membership group which increased eighteen percent year over year to nearly thirty million members and it's up approximately forty five percent or over nine million members to the fourth quarter of twenty nine nineteen actively engage members defined as those who didn't mean coupons feel of groceries rewards lots also continue to increase or the retention rate of these members remained over ninety percent at the end of the year remember that on average actively engage members spent four times more than not actively engaged customers oh no recap our progress against the force key strategic priorities that go up better than expected coupon twenty twenty one results loading install excellent is the foundation that enables everything we do and our commitment to enhancing our customers experience contribute meaningfully to the eighteen percent year over year growth in i'll just for your members and marketshare games from an inventor productivity perspective we simplified tasks and automated production planning it up fresh departments resulting in higher in stock conditions and more time for customer interactions for example in the belly we installed out of slices and slackers and implemented production planning tools that increase products available at least one reducing shrink and improve customer service these changes contributed to the better than expected results in fresh during the fourth quarter fresh id sales outpace at a store or two hundred and eighty basis points year over year and over five hundred basis points which is two years ago image addition we continue to invest and modernize our starfleet including adding and upgrading self checkout which about available and over eighteen hundred stores that optimizing the layout design to improve the customers shopping experience we completed two hundred and thirty six remodels and open and news doors and fiscal twenty twenty one in own brands would introduce eight hundred and thirty seven new products and increase adoption in lower penetrated divisions driving strong growth and improved margins you for since penetration reach twenty five point six percent with the strongest performance in floral delhi and meat during the you or branch was awarded for private label manufacturing association awards and one recognition from still brands magazine for innovation in private brand marketing while next priority is the acceleration about digital about me chuckle capabilities to fuel not growth and increase customer engagement satisfaction and detention and loyalty we launched an upscale our new unified mobile app or you a me eighty seven percent of the slaughters with play a being placed in the you are made by the end of the fiscal year we also introduced are you planning to that offers recipes including those that address dietary preferences such as vegetarian or gluten free customers can seamlessly at all recipe ingredients to their shopping list or immediately puts them in the you me it brought up and go we reach that goal of all two thousand stores serving ninety nine percent of all households in online delivery be expanded third party partnerships to offer more choices and accelerate the speed of deliberate and in both drive up and go and online delivery be reduce costs for order by adding five additional and of seas and three were rooms reconfiguring up eating software and stuff and models and imp proving are forecasting algorithms it digital we're beginning to capitalize on our richard proprietary data recently launching the other two media collective four a m c and she offers an existing business partners or reposted so marketing platform that reaches our extensive customer network and leverages are strong market share especially in the sixty eight percent a markets where we hold a number one another to share position we expect mc to be a leading growth and profit driver over the next several years increasing productivity or next priority a lot us to continue the fun future growth and opposite inflation in the second are about three or one point five billion dollars savings program when hands pricing and promotion capabilities for the rationalize indirect spin and expanded our national buying initiatives we expected to be targeted one point five billion dollars in savings by the end of fiscal year twenty twenty two and we will not stop there made this call we will discuss the next phase of a perpetual productivity engine beyond fiscal the a twenty two a foot priority strengthening our talent and culture and supporting the communities you stop and twenty twenty one we continue to acquired develop talent to transform the culture to harness local ownership it's scale and support are you on the channel imperatives we also recognize the frontline teams are embracing this cultural transformation while delivering exceptional nonsense to customers by awarding a discretionary thank you payment of the fourth quarter a senior leadership team also focus on amplifying a diversity equity and inclusion stretch are continuing to make progress at the senior levels of the companies that are benefiting from the experience of divorced you have thought that each of these leaders is bringing to the table in pharmacy or teams worked tirelessly to provide covered vaccinations for the communities we serve today we have administered over twelve million vaccinations it is t be increased investment and further developed our goals in the areas of climate action waste reduction in circularity community stewardship and diversity equity and inclusion later this month in conjunction with a day google announced this comprehensive set of goals publicly we're very pleased with the progress we've made against all us strategic priorities and they a significant headroom and a strong foundation to build on and twenty twenty two a lot of the call over is sharon to cover the details about fourth quarter and to school year results
spk_3: thank you for back in the morning every one it's great to be here with you today our fourth quarter twenty one without for strong across all key metrics identical sales were up seven and a half percent and up nineteen point three percent on a two year stack basis with momentum continuing into one twenty two retail price inflation as well as market share game contributed to the result gross margin rate with twenty eight point seven percent and queue for twenty twenty one excluding fuel the gross margin rate was flat compared to last year productivity improved covered related pharmacy margins and a favorable products we're offset by the rate impact of increased product costs driven by the current inflationary environment and higher supply chain and by so expensive telling an administrative expenses as a percentage of sales were twenty four point nine percent each year for twenty twenty one excluding fuel in a favorable pension adjustments as in a decree thirty basis points compared to last year this decrease was primarily driven by lower carbon my team related expenses and the benefit of productivity initiative this decreases were partially offset by market driven wage rate increases a discretionary appreciation payment to our frontline associate expenses related to the acceleration of our digital and only channel capabilities and higher depreciation do for twenty one adjusted ebitda was one point o seven four billion compared to nine hundred and seventy million last year this increase but primarily driven by the flow through them are seven and a half percent id sales increase and the margin benefit related to administering i came back the q for twenty one just the dps was seventy five cents hopefully diluted share compared to sixty cents per fully deleted sharing que for twenty twenty turning to four year fiscal twenty one id sales were near flat and up sixteen point eight percent on a two years back basis we also delivered adjusted ebitda a four point three nine eight billion as our productivity initiatives and margin benefit from colvin i came back seen a strategic investments and substantially offset product wage and other inflationary headwinds oh you adjusted a p as came in at three dollars and seven cents nearly three times or two thousand and nineteen adjusted apia of a dollar for oh now discuss this got twenty one cash flow and capital allocation strong earnings and temporary reduction in working capital go better than expected cash flow capital expenditures and fiscal twenty one for one point six billion with the majority of investment being made and the modernization of our school athlete and the building of our digital and technology platform both of which we expect will continue to fuel or transformation as we enter twenty twenty two we also return to hundred and seven million to our shareholders too common dividend every pay three hundred and thirty million an outstanding know net that leverage at the end of two to twenty one with one point two time compared to one point five times in fiscal twenty twenty and two point nine times in fiscal twenty nine team i'd now like to provide an update on a recent labor relations activity we have continued to settle labor contracts that provide an overall wage and benefit package that rewards are existing team members for their significant contribution and strengthen our competitive positioning in the markets we serve during the fourth quarter of twenty twenty one we settled retail contract in denver portland montana idaho oregon and the mid atlantic thus far in the first quarter twenty twenty two we have also which tentative settlements and both northern and southern california with retail contrast seattle las vegas shot and jewel left to be negotiated this year i will now turn the call back over to the back to discuss our fiscal twenty two priority
spk_4: thank you sharon
spk_2: as we look forward to preschool twenty two we're entering the next phase of a transformation strategy customers for life our belief and evidences that red be all at our best in the brick and mortar and digital world or possible never leave us and cheaper more of their wallet with us
spk_5: what's was for life
spk_2: is built around this belief that satisfied customers create outsized lifetime value and that everything we do should enable more sticking its possible for life is anchored on placing the customer at the centre of everything we do with the ultimate goal of supporting our customers every day every week and for a lifetime what our customers to interact with does daily not you to shop but sometimes to simply consume relevant content about food or plan meals for foreign permission to inspire their wellbeing a business model is pivoting to one that his loyalty based doubling down on our on be channeled engage with customers beyond just transactions we would elevate the installer experience when the shop with us expert or services and content which offerings and build a set of competitive and time capabilities that create a compelling reason for our customers to seek a lifetime relationship with our team members and banners the support this pivot we will be investing in the following strategic priorities digital connecting and engaging all customers to our mobile app and website so they can enjoy integrated and curated experiences and ecommerce the community the oil the hill and media differentiating our store experience by deepening engagement to the use of technology to move into book pain points to allow them to focus on customer service which is just tasks i'm simplifying the end to and shopping journey and evolving store operations to support on the general growth enhancing what we offer by elevating a distinctive that in fresh expanding our own brand products and services including already news program and then panting product offerings instead of store to address customers changing needs and preferences modernizing up capabilities in part to an improved supply chain and hence data and data analytics and ongoing productivity all built on the foundation of being locally great and nationally strong and finally further embedding he has to throughout our operations success against his priorities will be measured based on increased it to the engagement expanded merchandise and service offerings a competitively different cheated on the channel experience and an accelerated set of good to and supply chain capabilities i will not to the paul over to sharing to discuss the financial outlook for twenty twenty two
spk_3: as the deck said we're entering the got twenty two at the next phase of our transformation but continued momentum and strength and our core business edited by our to one today miss single digit id sales increase we are getting market share and the investment we have made in growth and productivity are delivering better than expected returns throughout the pandemic we capitalized on the opportunity to attract new customers and had entered twenty twenty two with thirty million just for you loyalty members a forty five percent increase persevere and twenty nineteen with that is the backdrop article twenty two outlook assumes the phone we expect fiscal twenty two id fails to increase two to three percent driven by continued inflation and marketshare game in the first half of the year we expect id fails to be about the for your range in the back half we expect id sales to be below the for your rate is due to cycling heightened inflation in the back half a fiscal twenty one we expected tested even got in the rain to four point one five to four point two five billion reflecting continued growth in the business and stable gross margin and just got twenty two in our core business excluding fuel we are expecting gross margin raid expansion driven by productivity tailwind of expecting however a sixty five percent decline in coca destinations and related march the impact of which will be greater than the corpus is margin raid expansion therefore factoring in both drivers we're expecting the gross margin rate excluding fuel to be down slightly and to good twenty two in selling an administrative expenses we are incrementally investing in our strategic priorities including our digital transformation the albertsons media collected and the modernization of our supply chain which will increase or as your neighbor a good twenty two but dr long term benefits productivity tailwind are also substantially upsetting a significant increase in our lee wages and benefits for our frontline associates that brings us to adjusted apia which we expect will be in the range of two dollars and seventy seven to two dollars and eighty five cents per share they said our current bullied diluted share cow the support this outlook we expect capital expenditures to be in the range of to the two point one billion with more than half of the spending invested in modernization and digitization in our stores and the remaining in the expansion of our digital offering an optimization of our supply chain i'd also like to share with you our latest view of additional productivity by the end of fiscal twenty two we will had delivered on our three year commitment of one point five billion and productivity is that it's coming to a close we had started blaming the next wave of productivity and have already identified seven hundred and fifty million and future saving that we are committing choose between fiscal twenty three and to go twenty five in the areas of automation and digital tools skilled workforce management modernization of our that like chain and as dna optimization are now turn the call back over to put that for closing remarks
spk_4: going to shown
spk_2: as shown just mention your pleased with our twenty twenty one results and the continuing moment we're seeing as we enter twenty twenty two or relative performance evidenced by a profitable id sales growth the market share games continues to be strong our strategies working i good executing well against a doctor why the pleasures that the translation the began before the pandemic of significant restricted a company that are a shows with accelerate agree models implemented technology enabled coprocessors an adventure capabilities and fresh leveraging are still base we have built a scaled of channel capability including drug up and google and online delivery that is proving to be sticky with customers or engage across channels we have developed a robust the platform and a unified mobile app that engages customers and personalizes offers for up during the live just for you members we have learned to leverage or scale in by to capability such as pricing and promotions merchandising and supply chain without compromising agility and local ownership we've proven that we can deliver productivity apps scale and are adding an incremental wave all of these foundational capabilities of created a springboard for customers for life than on next phase of group while we recognize that are a number of uncertainties the macro economic environment as we enter twenty twenty two we've demonstrated a proven track record in the execution about strategy and i'm confident in our ability to deliver the goods the twenty twenty two priorities that laid out for you today but none of this will be possible without the unwavering commitment of our associates and the ongoing support of our bender parties and shareholders now open the call for question
spk_0: thank you at the sun will be conducting a question and answer session if it ask question questions to sign three stress star one from your telephone keypad and a confirmation tillman indicate your lines in the question que a fresh start to feel a to move your questions from the que publishers using speaker equipment maybe the sorry pick up your handset before pressing the star he's the matrix questions or as many producers as possible we we're on yourself one question in one follow us
spk_6: thank you have first question was coming from line of robbie ohms was bank of america to just use your situation the hague morning and i'm grey corner from i'll just do my two questions or for the first one is just on the id sales guidance maybe a little more color we we just have the i'm the march food at home and play she came out around ten percent i think sharing you said you know you're you're seeing sort of live single digit a train
spk_2: today you know that that seems like you'd be falling behind the overall food at home inflation numbers may be more colorado
spk_6: you know why that may be in the deny in some thoughts on that and then you know the back
spk_3: new you talked about enhancing center of store for needs and preferences i was hoping the gets more our from you on what what that means what you're seeing center store changing roddick thank you i'll take their first question on the mit single digit can't fail they are currently saying we killed very good about the strength of our business or we have a substantial easter chef that's not an albertsons dynamic that's an industry dynamic
spk_2: because last year at the time easter would have already happened as it's not be happening now for a couple of weeks so we'll see how the rest of the quarter plays out that we wanted to make sure that we gave you guys color on where we are at that point in time and we are running on and the mets single digit range so i'll bet the deck take the other party or question that robbie on the set still recall riyadh we started this way all about buying differently right down and so now that we have a book consolidated approach to going to the market especially the said a store we know also have an opportunity to start taking
spk_7: or decisions on categories where we under index and there are some very meaningful categories that are growing that we under index enough space for that other examples of the types of things that we go to continue to do and we could do that at a national scale so that we can get the best bang for the buck so the dutch by now
spk_2: later on the set of store the other asia or mean it's not so much at a store bought it or know where it fits the whole new solution right it's kind of fits with what about i talked about the layout and optimizing things those are the types of things are also working on so that we could not be as quick as such trips you feel somewhat so
spk_6: cores that are oriented towards those solving for a meal solution for the evening to get in and out with a few said of still categories what family the meals dose of the participants were working on gog
spk_0: that sounds great thank you so much better
spk_8: and next question comes from the land of edward kelly was wells fargo to she was your first hi good morning everyone
spk_9: at first but up on it on inflation either there is a growing you know said a consensus concern i guess that we could see elevated to price inflation
spk_6: for some time now with the war in ukraine
spk_9: i guess what what is your expectation for in a way inflation
spk_2: may pete based upon kind of what you're hearing from vendors and newark minute your guide and seems to suggest that maybe you think it's peak now i'm in then in terms of last to city you know it's hard to imagine that electricity stays so low you know like robbie said we see ten percent to tp i could i what are you seeing from a consumer
spk_6: behavior standpoint and then what are you what are you expecting from a less the city standpoint from here
spk_7: pm modi go first on inflation let me just provide a little bit of context it i hope you guys are able to see that we're managing the inflation very very wet by conservative think about what we're trying to optimize years we want to make sure that for competitive and the really matter that it's marketshare games
spk_2: dollars share and you to chair or to food and new low and we've got a nice track record all to the water which are sustaining a track record of machetes and at the same time not compromising goes much so so that's good that's the question that return to work through and we're doing very well with it because we're giving people a choice
spk_7: it's customers choices the magic licks were and we are a lot of customers to get a competitive basket right by doing that
spk_2: on what we have done is that we underestimated that the current level of inflation
spk_7: i think you foresee guy was seven point four percent okay and i just saw use this morning that inflation overall was eight percent or so we suspect that this is rate of inflation will continue till it's cycles itself out around september which would be the beginning of our second half and assumption we've made it such as it flesh i'm a moderate are in the second half of a the assumption limit so you could you could argue that if you think that what's happening in ukraine was created for inflation that our assumption there is conservative but the way they've approached it is assumed that inflation will be lighter and moderate of the second after year
spk_2: then it was a business that way because they return to drive more productivity and other things over their plight and if inflation came up that it gets your second question if the consumer behaves like she's behaving now where honestly we're not seeing of change in behavior when we're still seeing the consumers very strong not fitting any meaningful trade down your i'll give you an example organic sales penetration is up not down and our business okay so we can for consumers too strong whether the consumer will stay that way even if if if we go to the second half or that's the fall and inflation continues to be eight nine percent i don't know
spk_8: i would imagine you'd see some elasticity but that's the approach we've taken we wanted we expected to moderate the second half i hope that gives you can of color on a we thought about it
spk_9: yeah no that's great and just a click follow up on sharon on the guidance for the gross margin you know the compared to two thousand and nineteen is kind of different throughout the year in ah it's much harder in the first half that in is in the back half how do we think about sorta like first half
spk_3: gross margins yeah so we're not guiding by quarter i try to give you a little more color on on the gross margins as we walk through the year one thing to think about is that just as you think about twenty twenty two as it relates to close it you're going to see the most significant impacts from the vaccinations into one and then in queue to our numbers were down last year in clovis thankyou three picked up an issue for picked up tell you when you think about modeling that those
spk_10: flow through on cold it is substantial on these vaccinations so i hope that of the get a little more help i've already talked about the pressure of the called his explanation but that up pressure that you need to model that think about que one three and four as being the bigger pulled quarters and honestly
spk_0: two three and four where the bigger as that shit up the four quarters
spk_2: thank you that expressions coming from the line is john taken buckle with guggenheim to you question
spk_11: the goes first question to you i'm in some ways cause the the us dollar opportunity when i think about your your best customers vs maybe the average
spk_2: right i would think there's a several hundred dollar and you'll spend an opportunity there in the with that money is if you think about it you two to three calm your longer term
spk_7: do you can you drive to there's majority of that just from the best fifteen or twenty percent of your your customer base you can you do that
spk_2: hey john of morning
spk_5: a perched on your puts question it's not several hundred to seven thousands look at that for the customers who are most deeply engaged with arson and the way we think about it if i can give you a little context year if you go back even to arrive your document you see that we talked about this notion of customers who engage in multiple parts
spk_7: a business stay longer with us and spend more with us okay that was evident but it was not it to kind of scale we have today what do i mean by the today we were thirty million customers engaged nobody program that was one that they could go through and of that one up it's important to the whole company with you and with it's not
spk_2: the whole yet but it'll be there were you can go to the pharmacy business you can engage in he was you can get counted on wheels and recipes that so and so forth so we've got that we've got an ecommerce business now that national like with that would drive up and go in and delivery and many many choices of delivery that to revitalized pharmacy bit
spk_7: just as you put all of these together it gives us at a scale at scale national scale an ability to create what we called sticky mess with our customers so the first part of your question yes it's thousands of dollars not hundreds of dollars and the second part of your porch it's absolutely as you know we magic driving more and more about syria
spk_2: from this group of customers and a big way to do it is by driving more retention with these customers in the region we have retention is all of the touch points we have have just become stronger and it's scale to the helped or okay yeah
spk_3: maybe secondly you talk about the seven should be productivity for them to the next three years that you just started was a soon we will not finish their it is it possible are likely that ends up being similar to the west rewrite the billion five in that your thought process on the new you is there is a new secular algo versus the old one right you know is is this the same on a higher base was it possible to sell goes a little higher than the old one
spk_2: i'll let me start with the productivity christ said as we said in that prepared remarks and we had just started bringing this next phase of productivity
spk_0: over the last six months and hi joyce and it's a perpetual productivity edited so there is absolutely the expectation that over times that number will continue to grow so that's the first question and then add on the second question like that you want to tailor as
spk_2: john the way i think about it is you know we when we went out when we went to the i feel we were or to applaud from right a long term algorithm obviously be sustained a much higher number than that are not even not just don't have an absolute basis but on a relative bases has been incredibly good up as we put a lot of different things in place
spk_9: let me put it this way to be so i'd be disappointed if that's where we ended up with a lot of lotta law but we need to laugh what we're going through this year before we can establish a pattern on that
spk_2: thank you
spk_5: an expression commission line of can golden was gp morgan
spk_2: hi good morning on your back i think i already know the answer to this based on your tone earlier but is it fair to say that as you are not seeing any meaningful changes in how the consumers behaving in this is true with you the consumer as you define it is considered higher and lower and it's wanted to get a little bit of a sense they are given how much sensitivity the is and the market right now to more and consumers in their spending yeah
spk_12: how can i do i have not seen as a big difference yeah we've not seen a big difference yet across income segments right that one thing that we have bob
spk_2: putting our plan is that as snap funds reduce which we suspect will go down over as we go to the year are that that lower and consumer or the consumers that were more dependent on stab let me put it that way i'll will reduce don't spend all that said out today what we've seen as currency shifted we haven't seen that behavior yet but we don't want to conclude that and just assume that for the full gear so as we go to the second half we have assumed that ah the consumer that was depending on snapped will spend less out of anything be just spend less by trading done right and we've assumed that we gave you going forward
spk_3: can but we haven't seen that if any of us segments to date are you seeing a little bit of are starting to your outlook rather assume a little bit of incremental promotions incremental discounting to sort of offset some of those pressures of those consumers might feel yeah it does it does get or in in my follow abuse and this is possibly a waste of both and i'll go down this route anyway on can you talk about what the impetus was for the strategic review it's just such a so odd to see a company that appeals to recently performing well fundamentally you know adding a great see sweet talent to announce something like this especially given how broad some of the warning you saw i'm just curious but you could talk about sort of what sparked all of this which is created such noise in the market yeah that can be able ever really start by the fact that valuation compared to appear on with not reflecting the strength of our performance and there were reasons in our minds for some of that our performances than if you know if you put us on the
spk_13: same and basis at kroger we have different quarter and but if you measure us out here we outperform kroger into for we outperformed and for the year etc so that was real originally the catalyst for it and of course there was the overhang of the preferred shares that had hit them
spk_0: market and then of course the ikea lotta up with coming so as opposed to play last and now you know that's an alternative right you pick just react to each event
spk_14: we felt that a much more comprehensive assessment on was much more inclusive of all of the alternatives the you know that is included as you know i don't have to read the pressure me to that the assessment of a balance sheet optimization any kind of such a dick or financial transaction etc so that's what we're looking at and that was the catalyst for i said that you know after we put out that really am
spk_2: the catalyst hasn't changed that's exactly why we're doing it and located you guys that faded as we move forward
spk_7: makes a lecture
spk_2: the next question comes in line of scott mission with our time capital please
spk_7: hey guys thanks to thank you taking my questions and so i just want to go back to what robbie was talking about
spk_15: and the inflation rate market share it's will make sure you guys are assuming are you thinking you're going to continue to gain sheer volume share and ah dollar share this year casino looking at the guide may think think that you think the some kind of change their
spk_14: no scott we're good at real we have gained you know let me give you the share stories so when we started this year we were laughing so significant numbers and twenty twenty so to the first half of twenty twenty one fiscal twenty one we were clearly gaining shared food but we were not getting services mueller and
spk_16: because i think with do not the grocery supermarket outperform the rest of the market in twenty twenty now the second half the your everything don't positive to we've gained sharon noodle and is now now in in food on dollars and units as the rate of game comes
spk_2: judges it's just continued so why we're expecting to continue to gain shit out of the different things that were doing we we watch that and accept that as our primary metric
spk_17: okay perfect and then
spk_2: the studio i wish someone is a bunch of them and babies maybe talked about competition and product availability you know that you're seeing right now is competition changing much and clearly a we may still ask product availability my she'd may get worse i mean that the chicken is this is a hard marty chicken breasts tell us thinking about that as the year goes goes on both competition and part availability the thought dove products availability continues to be a challenge
spk_7: ah continues to be a little bit of whack a mole
spk_2: and we had imagined back then that by now can see some relief but it stopped the case
spk_18: cause i if we're imagining that product available availability will continue to be a challenge to most of this calendar your maybe of the middle of the beer at least and maybe start to get some relief in in the fall which is why the also thing that might be most supply and that supply my full
spk_0: down some inflation like so that's how we've thought about it
spk_19: the and example as i right for sega going to easter there so the flu when they've got for prices going up on know of course going up on l on just the white eggs and so we countries to have all those kinds of issues and we're planning that we need to manage around that competitively of not a whole lot of change i'd say it's still quite stable the carpeted that isn't it is it's hard for somebody to get into a massively promotional mindset of given the challenges of product availability
spk_2: that i guess an expression come from the line of simeon gutman with morgan stanley to your question
spk_7: the morning everyone and like to paraphrase something on inflation and units maybe for the for the rest of the year of the next so i if you if we look at the composition of comp
spk_19: it looks like it's tracking inflation which means maybe units are flatter something like that and that's different than where it was you know year or so ago that than it that's fine i think that makes sense it sound like you're not expecting that dynamic to change even as inflation continues if i heard that right but there may
spk_20: be some sensitivity at the low end with with map does that mean there's an offset and then you know town like you again you don't you're not expecting inflation to step up later in the year we're going to lap and an inflation sort of normalizes
spk_7: that's always that's right out so relaxed we are planned that when be cycle the current level of inflation
spk_19: inflation will moderate significantly and ad that's going to depend on supplies coming into and we think there might be supply in the latter part of a year but that's exactly how we thought about it when we have put the guidance forward to you that the second half when that much more moderate inflation and we've also also assumed that the lower and customers snap customer will spend less as we go to the second half of why you okay and is is to clarify not my follow up and this is this is based on today even as inflation has picked up you're not seeing as a further degradation and units or is it picked picks up as it is kind of in it's thing flat and that that and that gives you the confidence that we want to that he left his
spk_3: epoch of it karate have not seen a further degredation and units which seem consistent behavior from the customer okay and then my follow up in my been off from work more sharon related and this goes back to what john asked earlier he your even if you look at it relatives to twenty nine team is have been about a billion dollars so it's pretty impressive this year the outlook is comps are going to grow yet at the midpoint yb it doesn't look like it's going on it looks like it's going to decline some of it could just be conservatism we'll see how the your plays out on some of it there's expenses should we think about it as an investment year and then as an investment year does it normalize one year later two years later i understand is a little gross margin in a compare issue regarding vaccines but how should we think is on a two to three comp your he did based probably ought to grow in the future i think that's probably fair assumption but when did that began yeah so when you think about the guidance there are two major pressure said i'd sure if you go back and look at the transcript i tried to lay it out for you in that gross margin in the to an eye on the gross margin side we are expecting be gross margin and then that was floated at the bottom line of call that are basically to decline by sixty five percent and let's put this in comparison to croker as an example
spk_2: they had eleven million plus covets a and they are basically twice i rapidly as we have both million tell actually more vaccinations than they've done and it on half the robin is so the impact of called it an albertsons is significantly higher demand so that blow through and that pressure thought through to the bottom line
spk_20: fine and we're talking about a significant number and you can do the math we have helped you with that last quarter to do the math on that and then the second thing is to your point we are making investments those investments are exactly where you are seeing the benefit that we're seeing today you are
spk_0: ain't that as investments in our digital transformation and the average since media collective and another major areas the modernization of our supply chain that is a big project talking about a quarter that's coming into twenty twenty two and twenty twenty three so those are the three areas that are making us and does
spk_3: and of course all labor really a port have substantial increases in life or like everyone else in the industry and by the productivity has been such a strong kill it and that continued success that that that it's really cold it and the contestants
spk_21: the door for for of productivity he up over the last two years we've learned how to deliver productivity at scale to gives us more confidence
spk_2: and so as to the productivity becomes an engine right in and as we've said before they're so much border exploded not company have given where we work and were and given where we began living thing thanks good luck honest question comes nolan of repair for with other namer to shoot question the morning is actually eric i on to pass thanks for taking a question to first mean it sounds like you're not seeing any signs of trade down you know to date but maybe could talk about your expectations on the and the private label side the sheer you know you are you expecting you know maybe we started the you know a shift to have more towards private label and you know maybe did any
spk_3: ah you can share i and privately the penetration the show would be helpful yup private label of the of penetration is back up to twenty five point six psi recall that was what it was before the pandemic to be right back there are and i would expect a gradual i would expect private label to become a bigger and bigger part of the country was basket
spk_21: our customers basket only because you know with that we are offering better price points better opening price points
spk_3: now just like everybody else we do have the like challenges in private private label brands that the national brands have and but as that comes back up and if this inflation votes or to become a bigger and bigger initiative in our growth and gross margin agenda okay now that up and then just switching gears to as she and i mean yeah highlighted the pledge intake and neat could dive a little bit more into you know the latest you're seeing you know on the and the wage pressure from their contract and labour bill availability and not that also just in terms of the investment you're making this year he knows there is or anything to call out into the caden you know should be think about you know any of the corners the mark more pressure by by those investments as yeah
spk_10: yeah as on the sc in a sign obviously we lifted out for you and the prepared remarks are we're we have finalized our contracts autumn northern and southern california on our to be ratified by we have settled they are and then we have the other
spk_3: or big one in that is gonna be cool are witches in the midwest so fast as we see each other throughout the year what you're going to see a gradual an incremental increases coming through the year they're starting now on all of the big ones that i laid out in the release that have been under negotiation are happening with us today and then the rest will come in toward me meteor and toward the end of the year so that's how you should think about it but again to that point i want to go back to productivity this is not a surprise and i know it's not five any of you on the call and it's modern a surprise to us we expected to see substantial increases and as such have planned productivity accordingly and were proactive on productivity in order to address that so the thing that we're here to say today as well
spk_21: first of all we are it puts us in a very strong competitive position in the markets that we serve lot of weed course nobody likes cost increases you know we are investing in our associates they are important to our mission and we are moving forward
spk_0: with the highest increases that we've seen but putting the productivity and to that the back talked about behind it and that will be happening throughout the year so those are the big drivers on and then of course we all want us to continue to deliver against safe investments in these
spk_22: strategic priorities including and i really want to call out the albertsons media collective
spk_23: you know this is our alternative whatever in the industry they're calling it alternative revenue streams we are several years behind others in that state we're building it we announced it earlier this year it's something we're really excited about we have to build the foundation those investments are going into day but the returns are going to start happening over the next couple of years and had substantial so those are areas where investors want to see investment and that's exactly where the money golly right thing for the additional color
spk_22: big you are next question shumlin have shown short with barclays tissues you
spk_24: hi thanks very much
spk_3: i wanted to than apologies for the short term orientation of the questions but could you actually it to question could you actually quantify the easter shift impact on com
spk_10: in the quarter to date
spk_3: and then my second question is obviously gotten a lot of questions on your even dog died i'm wondering if you could actually quantify the vaccine dollar benefit to twenty twenty one as well as actual lapping of kobe costs and twenty twenty one because i would just hope frame be know the down guide on either twenty two yeah so i'm karen or into we see what happens at easter to quantify the easter shifted harder on to do that we're not going to be guiding our weekly weekly sales so we gave you where we are today
spk_7: your second question on on vaccination we have not specifically quantified that number and what that headwind looks like
spk_3: we did point out that were doubt we expect to be down about sixty five percent on the number of vaccinations that we give and last quarter you might recall that in our company after in our follow up call you know we get you found some numbers out there on the internet that helps you sort of put a frame around that are we other arrangements and contract that we had a confidentiality agreement phone so i can't sit here today and give you the exact numbers but leader to say that is insubstantial earnings had headwind a going into next year and we have accounted for that and leave got guidance
spk_23: okay i'm hoping to progressive of a movie years
spk_3: i mean
spk_0: sixty five percent of revolution vaccine is literally route
spk_25: and carolina nice wine club it cause i think you have one other piece which with baseline called it costs and i we don't anticipate got changing cause it is not gone
spk_7: just look at philadelphia the kids went back to mouth mandates in april
spk_5: it's not gone and we would not anticipate on the club caught sight to see a material change year over year of cleanliness and our stores in keeping people customers and employees safe a top priority and that will not change
spk_2: and if mask and with respect to devaluation got vs peers can use clarify exactly who you're you're including your peers said i mean it it i'm assuming it's not just kruger
spk_7: yeah
spk_5: if we if you could look at a lot of different fears that but i think you can take a look at the places where you're pointing through in your own reports and other the be the same places we've been looking it's law
spk_7: thank you
spk_25: this version comes in the line is chuck to compete with north coast research questions good morning everyone my school i want to see heavy common how business would be held the customers are behaving as gasoline prices of track to do your fourth quarter and thus far in the first quarter push
spk_5: job to up to the morning you know
spk_2: or want go through a with dog with customers is that the profit the traffic is awful the last year and it's holding very steady but what's fascinating is that the baskets if i compared to nineteen are substantially larger for a dvd pro golfer inflation so one thinks that we're zoo over use i think we've got customers consolidating shawl that be a brother started during the pandemic i think it's too picky where people have consolidated trips with fuel prices go up to bleach tends to lead to even more consolidation of trips are great and are shipped from what
spk_26: might be other channels that are welcome to the community to people like us where you have a brother to the french boys are better so when i mean i'm not saying i'm seeing that i'm not seeing any we do dream job because of fuel prices but there's a new behavior that seems to become more
spk_0: are encouraged don't typically because be leaving born at all
spk_27: but it's leading towards will consolidation of trips the about response to the fuel component to the loyalty program any any effect on the written by your job
spk_7: great point you know the fuel rewards are incredibly powerful
spk_2: and that is always been it has always been one or our best returns and one of the biggest drug was the students so for the last several weeks with increase the number of rewards are that provide for fuel of that to drive it we do drug wars figures to us and we drive more of the consolidation of the best
spk_5: do you're right thank you good luck
spk_2: fresh additional and of polish me with city please use your question
spk_7: everyone was burned shoot him on for poll thanks for of squeeze loss and i just want to come in circle back to your price caps compared to competitors
spk_27: no sounds like to the marketplace is being quite rational right now and perhaps the long post to consumers are your guidance isn't you mention the you do it
spk_2: to the promotions to come it increases your progress progresses to specifically what you expect the changes to make the marketplace little promotional more promotional and is there is an improvement in supply chain you know how could that you know maybe benefit of your margins to help also some was promote
spk_7: growing up so the promotions of a different completely on subplot right n and b auto an operator that dodged more high low energy be obese and so we do about is a sort of cost was an important segment of customers who care about that and we want to make sure that we're able to serve them off one important difference though from the past is that of do recall go back to the thirty million people who are engaged in a lord program
spk_2: they get very very specific personalized promotions so even as promotions combat they don't sector or by belief is that the promotion will come back in and extremely granular it an extremely surgical work or rather than what was the old approach of promoting the putting a lot about the prompt
spk_3: a to draw get out for everybody so sorry not to the coming back would you be which is a good because i think it takes care of the possible that we need to take care of
spk_27: and products are are are you know
spk_0: great posts a man on the media to active you know what goes where are you in launching that are you earn to have a full team already hired him than anything you can share on her like the long term potential this initiative
spk_28: from what might be considered than twenty two guidance things you know out you should expect that to follow the pattern that you've seen with many others try to started this journey on on on on the media a business fucking call it of earlier are we've got a we've we've hired or team that has done this before that up and we had a lot of success
spk_3: we've been patient about building and because we wanted to build a deal right way and are in a modern way our and we've launched it info on february twenty seven so this your it's about building it it's not a good
spk_10: in the following years it'll become more material in not be now so but we are very very comfortable because the end of the day is being built to serve our customers who opposed to engage with us in the markets where we are the strongest and in those markets and for those customers we are one of the best vehicles
spk_29: to reach that if you want to market to today
spk_28: and recall call in our garden state we gave you this morning that it was called out of one of the area where we have significant investment in twenty twenty two
spk_30: got it thanks and good luck
spk_10: thank you for a final questions when he will come from the land of michael months on whatever core i inside
spk_2: hey they're good morning thanks for taking the questions
spk_7: one to ask if i couldn't first off on the flow through rate you know if the comp store sales do end up exceeding your guidance what's the right flow through a to think of sharon for every hundred deaths as comp you know beyond the midpoint
spk_28: yeah i would put that in the range of fifteen age
spk_10: percent of as a present sales yeah
spk_31: and it the sorry that for either tower a bit
spk_10: even if it got even to okay and then another followed by had was on the gasoline side obviously you had mentioned down the call the vaccine but is there any incremental color you can share in terms of in are either how much detail on i could have been last year or how much had one to thank god for this year
spk_0: as it relates to few well yeah i'm here to check for dinner

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