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Albertsons raises guidance after shopping surge

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Yahoo Finance's Brian Sozzi, Brian Cheung, and Julie Hyman break down how Albertsons is faring in Monday's market.

Video Transcript

BRIAN SOZZI: Given the fact that you do know where I live, you should know that I don't have an Albertsons by me. But a lot of people do, and a pretty good quarter at Albertsons here, guys. Three reasons I think why the stock is popping here in the pre-market I'll give you that list to call.

One, gross profit margins flat in an inflationary world. good win for Albertson's, dividend hike of 20%. And last but not least, the company raised its sales and profit outlook again, in an inflationary environment, Julie, pretty good.

JULIE HYMAN: Yeah, and it looks like same-store sales unexpectedly rose for Albertsons too, up 1 and 1/2%. Analysts were looking for a 1.9% decline. So interesting here that they were able to buck those expectations. And again, as you said, we've been looking for all of these signs of inflation, whether it is on the food and energy side, which is seen by the Fed as being more volatile and therefore does not come into its calculations as much.

And then on the core side and at least here, it is interesting that it doesn't look like their margins held up. But you have to wonder what they're going to say in the call about the sort of granularity of price increases.

BRIAN CHEUNG: Yeah, and one thing that, I mean, we've seen inflation everywhere. But one place where maybe you aren't seeing inflation as commonly is in dividends. Dividends increasing by 20% at this company. I mean, you want to talk about what their guidance is going to be going forward, what more of a signaling device is there than being able to raise your dividend in an environment as uncertain as this one?

So especially for kind of a consumer staple, like Albertsons, I think it's interesting to see whether or not their competitors with the ball in their court now, will also try to do the same. Not sure if their cash flow businesses, I think it really depends on expenses, are really in the same place where they have the ability to do that.

Right, Brian, it's not often you see a grocery store low-margin business come in here and hike their dividend by 20%. A good day for Albertsons, and CEO Vivek Sankaran will be back in the Yahoo Finance hot seat in the 11:00 to 1:00 hour. Looking forward to hearing his comment.