Jim Donald is leaving Albertsons in slightly better shape than he found it.
The CEO’s official last day coincided with the release of the retailer’s fourth-quarter and fiscal 2018 financial results, showing a slight increase in non-fuel comps, big growth in e-commerce and improving profitability.
Donald took over as president and CEO last year from Bob Miller and will hand over those roles to Vivek Sankaran on April 25. The Boise, Idaho-based retailer is in the process of building digital and e-commerce offerings while recovering from an extended period of deflation-related sluggish sales and addressing heavy debts. The retailer hit its fiscal year EBITDA target it forecast a year ago. Non-fuel comps of 1% came in below initial expectations but within revised guidance announced in January.
“We are very pleased with the trends in our business as demonstrated by our strong results in the fourth quarter and full year,” Donald said in a statement. “This performance in our core four-wall business is helping fund necessary investments into the business in both the four-wall and no-wall environments.”
Donald will begin a role as co-chairman of Albertsons’ board of director this week, succeeding Miller in that role. Leonard Laufer, who heads technology investments for Albertsons’ majority owner, Cerberus Capital Management, will join Donald as co-chairman.
Sales for the 12-week fourth quarter, which ended Feb. 23, were flat at $14 billion, reflecting a net decline of 49 stores since the end of last year’s fourth quarter. Identical-store sales, excluding fuel, were up by 1.1% in the quarter.
More encouraging for Albertsons was 52% growth in e-commerce sales and a stronger profit performance. Gross margin as a percent of sales totaled 29% in the quarter, up from 28.1% in last year’s fourth quarter. Adjusted EBITDA totaled $727.2 million, or 5.2% of sales, up from 5% of sales in last year’s fourth quarter.
Albertsons said a 40-basis point shrink reduction and increased penetration of private brands during the quarter sparked the higher profits.
Net earnings for the period totaled $135.6 million. Last year’s fourth-quarter net income of $388.3 million was almost entirely the result of a reduction in federal tax rates.
For the fiscal year, Albertsons posted sales of $605 billion, a 1% increase; non-fuel comp gains of 1%; and e-commerce sales growth of 83%. Gross profit was 27.9%, and net income totaled $131.1 million.
Albertsons reduced its net debt to adjusted EBITDA ratio of 3.5x at the end of fiscal 2018.