Not Just Snacks: Albertsons Says Customers Make More Trips To Buy Fresh Produce

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Snacks have proliferated in grocery baskets during COVID-19. But Albertsons Cos. ACI, -0.35% Inc. says customers also visit stores to stock up on fresh produce, from meat to fish to flowers.

“We believe that shopping for fresh produce drives travel as our loyal customers often stock up on stable items in one trip, but return frequently to purchase fresh produce,” said Vivek Sankaran, CEO of the grocery store. , while talking about the third-quarter earnings call, according to a FactSet transcript. See: Target’s holiday sales show how important stores are even as COVID-19 fuels online business According to the Frito-Lay Snack Index released in November 2020, consumers have eaten more during the pandemic. “Consumers have changed their behavior with 58 percent snacking more since COVID-19,” said Mike Del Pozzo, senior vice president of sales and chief customer officer for Frito-Lay North America, in a statement. Frito-Lay is part of PepsiCo Inc. PEP, + 1.07% Two-thirds (66%) of the 2,200 adults surveyed for the index say they have more snacks in the house than before the pandemic. Still, Albertsons’ Sankaran says identical sales of fresh items are higher than average. “In the third quarter, our most loyal shoppers increased their average spend by 200 new basis points compared to the average total spend in the store the previous year and continued to visit our stores twice a week, with almost three out of four trips, “He said.” Fresh produce has also been a catalyst in omnichannel, as fresh produce, including our high-quality meat and produce, has risen in the basket compared to pre-pandemic levels. Albertsons, who It went public in June 2020, reported fiscal third-quarter earnings that beat expectations and raised its full-year guidance.The stock has gained more than 11% over the past month and nearly 16% over the past three months. The S&P 500 SPX Index, + 0.30% has risen 8.8% in the last three months. Also: Walmart tests grocery delivery technology with HomeValet’s ‘smart box’ “We believe investors and They are overestimating the rate of moderation in household food demand in 2021 and that Albertsons’ strong fresh produce offerings (41% of sales vs. Kroger’s 24%) combined with recent reinvestments and strong execution will drive sales. / earnings better than anticipated next fiscal year, ”said Arun Sundaram, CFRA equity analyst, in a note. CFRA rates the strong buyout of Albertsons shares with a price target of $ 22. JPMorgan commented on the lackluster performance of Albertsons shares despite the results. Albertsons shares only gained 2% after better-than-expected gains. “At almost any other time in our 17 years covering food at home, this Albertsons impression … would probably have sent stocks significantly higher,” analysts said. JPMorgan says there are investor concerns about negative comparable sales and margins. But JPMorgan rates the overweight Albertsons stock with a price target of $ 20. “We believe Albertsons is an improving company in a home food industry that should remain strong for longer than many observers anticipate.” MKM Partners, like investors, is cautious. Watch: Picking Retail Winners Amid the Pandemic “We are concerned that the grocery industry will face several years of headwinds in foot traffic, with restaurants reopening, but less gradually than usual. initially expected, “Bill Kirk, CEO of MKM wrote in a note. “Against that backdrop, we expect prices to be very competitive and gross margins to come under pressure.” MKM rates Albertsons stock as neutral with a price target of $ 18.