Albertsons Stock Sinks 20% as Budget-Conscious Shoppers Turn to Cheaper Grocery Options

Albertsons shares fell more than 20% on Thursday, trading at $11.40 in the afternoon and putting the stock on pace for its worst day, after executives lowered full-year sales and profit targets. The company pointed to a more selective shopper base pulling back on spending. The drop reflects a change happening across the industry, as households everywhere stretch their grocery budgets.

Albertsons Cuts Its Profit Forecast for the Year Ahead

For the year ahead, the company now expects adjusted earnings between $1.75 and $1.85 per share for fiscal 2026, down from an earlier range of $2.22 to $2.32. Adjusted EBITDA guidance dropped to $3.55 billion to $3.625 billion, versus a prior forecast of $3.85 billion to $3.925 billion. Albertsons also revised its identical sales outlook to a decline of 0.5% to 1.5%, reversing an earlier call for flat to 1% growth.

The Numbers Behind the Pullback

Grocery unit sales fell 1.8% in June from a year earlier, per Bain & Company and NielsenIQ data, as prices climbed to roughly 33% above 2019 levels. Bain found 80% of Americans are trying to spend less, with many lower-income households further squeezed by reduced SNAP benefits. Susan Morris said Albertsons’ sharpest customer losses have come from shoppers moving toward low-price retailers such as Walmart and Amazon.

First Quarter Numbers Show the Pressure Building

Identical sales fell 0.8% in the first quarter, and the company reported net income of $84.7 million, or 17 cents per share, sharply lower than the $236.4 million, or 41 cents per share, posted a year earlier. Gross margin slipped 23 basis points in the second quarter after a 25 basis point decline the quarter before, a sign that cost pressures are compounding rather than easing.

Digital and Pharmacy Are Growing While Core Grocery Slows

Susan Morris said the company’s digital and pharmacy businesses continued to deliver strong growth in the first quarter, even as core grocery came under pressure from softer industry trends and a more cautious consumer. The split shows where Albertsons is finding stability even as its largest and most traditional business line comes under strain from shifting shopping habits, a pattern playing out at grocers nationwide.

Rising Fuel Costs Could Add to the Strain

Fuel and packaging costs are expected to climb through the year as tensions tied to the war in Iran escalate. Gasoline prices crossing $4 a gallon again could further curb consumer spending on groceries, adding to the budget pressures already squeezing households. Albertsons said it plans to negotiate with suppliers to hold prices down rather than pass rising costs on to shoppers.

Albertsons Is Spending More to Keep Customers From Leaving

The company has cut prices on hundreds of items, expanded investment in its e-commerce platform to compete on convenience, and leaned further into private-label brands to offer lower-cost alternatives. Morris said Albertsons is choosing to accelerate these investments in the customer experience ahead of expected productivity gains, betting the near-term costs will support stronger growth over time. These moves come alongside a broader operational overhaul now taking shape.

The Company Is Restructuring How Its Stores Are Run

Albertsons plans to consolidate its operating structure from 11 divisions into four regional units, a shift aimed at streamlining decision-making across its store network. The company also intends to centralize merchandising functions such as pricing, promotions, and supplier relationships, consolidating tasks that were previously handled at the division level. Executives say the goal is to sharpen store performance as competition intensifies.

Albertsons’ Longtime CFO Is Stepping Down This Year

Albertsons said chief financial officer Sharon McCollam will retire later this year, an announcement made alongside the company’s earnings report and guidance cut. Her departure adds to a stretch that includes weaker sales, a lowered outlook and a restructuring already underway. RBC Capital Markets analyst Steven Shemesh said McCollam is well regarded by investors, and expects the news to be viewed negatively given the company’s current business challenges.

The Pressure Extends Well Beyond Albertsons Alone

Shares of rival Kroger fell 3%, and Sprouts Farmers Market slipped about 1% the same day, a sign investors see the strain spreading industry-wide. The shift mirrors a broader move already underway, with suppliers like PepsiCo increasing promotions and retailers like Walmart and Kroger cutting prices to win back shoppers. “The entire industry is trying to get back to unit growth,” said Telsey Advisory Group analyst Joe Feldman.