Yahoo Finance Live checks out shares of Albertsons following its outlook on consumer spending tied to higher food prices and grocery bills.
BROOKE DIPALMA: I'm taking a closer look at Albertsons, ticker ACI. The grocery chain reported fiscal fourth quarter profit that's in sales that topped expectations. Sales were up 5.6%, but executives warned it was preparing for a, quote unquote, "more difficult consumer" in the coming year. The CEO said he expects significant labor investments and inflationary cost increases also. It also expects less revenue from COVID-19 vaccines and at-home test kits this year. All this as Kroger said last month it is on track to complete its acquisition of Albertsons in early 2024.
Now, this also comes as we're expecting the CPI report once again tomorrow. We're waiting to see just how much food prices potentially could go up and weigh down on Americans' wallets, and in addition to how we've been hearing from so many companies just how high stubborn food inflation has weighed on American wallets. But one analyst on Wall Street said that these results right here may be more smoke than it is fire, not to run too far yet.
JOSH SCHAFER: Yeah, the vaccine stuff sort of stuck out to me, Brooke, when you think about COVID vaccines and as we were just talking about with Moderna, right, that number coming down significantly. I think it was over 2 million in the same quarter of last year. Now under a million, so significantly coming down.
Perhaps a company Albertson's that could benefit from a company like Moderna having more vaccines and more options. But I do think the headline there is that more difficult consumer environment that you pointed to, right? Where do we see that sort of trickle in to more earnings over the next couple of weeks, Seana, and how that plays out in the grocers, but also just broadly.
SEANA SMITH: Yeah, exactly. And I think what they said there, that it could get worse in the second half of the year, that's something that we've heard from a couple of the bigger players just really warning about how rocky maybe these next several months could be, specifically from Walmart. We also heard it from Target, just to name two of the players, larger retail names within the space.
But the fact that they're seeing such a challenging second half of the year really speaks to maybe the pressure that the economy is going to be under how consumers maybe are going to pull back spending even more in the face of, yes, maybe we will see some improvement on cost, but inflation still remaining extremely sticky.