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Albertsons tops Q3 profit forecasts, boosts outlook amid pandemic

Vivek Sankaran, CEO of Albertsons, joined Yahoo Finance to discuss the company’s strong Q3 results.

Video Transcript

SEANA SMITH: I wanted to take a look at Albertsons, because shares of Albertsons here getting a bit of a boost today, the stock up just around 2%. You can see it right there on your screen, above $17 a share. They beat the Street's expectations. Digital sales for the quarter more than tripling during the quarter.

So for more on this, we want to bring in Vivek Sankaran. He's the CEO of Albertsons. We're also joined by Yahoo Finance correspondent Julia La Roche. And Vivek, congratulations on the solid quarter that you just reported.

Digital sales is where I want to start, because this number jumped out to me. It really highlights, I think, the trends that we're seeing as a result of Covid. I'm curious just how your business has changed and how your strategy has changed over the past year due to the pandemic.

VIVEK SANKARAN: Hey, thanks for having me. We had a great quarter, as you saw. And thanks to the amazing frontline that makes it happen for us every day.

Now, on digital sales, think of that as delivery and pickup in our stores. And it grew 225% this last quarter. It's an important part of how the consumer is shopping today. I think she wants a choice sometimes to go to the store, sometimes to have it delivered, sometimes just pick it up in the trunk of the car.

And the consumers are engaged in both. They spent about 20%, 22% more with us, which is fabulous. And the ones who have shopped with us for a long time, when they start engaging in this, there's a segment of our customers that are spending three times as much with us. So we know that customers care about it. And we are accelerating capacity and capability in that space very, very significantly.

JULIA LA ROCHE: Vivek, it's Julia La Roche here. Let's dig in and a bit more on the consumption trends. I do know that you look at the patterns, you look at the data. As you look at the different stores in your ecosystem, what are you seeing very specific in consumption trends? And how do those kind of correlate with the Covid-19 pandemic, and when we start to see spikes in cases in certain areas, and how that is changing the way folks shop?

VIVEK SANKARAN: Julia, we have-- you know, since the start of the pandemic around March of last year, we've been trying to track if there is a tight correlation between cases going up in a particular market or not and the sales in that particular market. What I'll tell you is that the broader trend that I see is that the sentiment around Covid-- when anxiety goes up, you find people retrenching and eating more at home. So it goes up and down in most of our markets together.

The trend that I think is going to continue to stick even after the pandemic is all of us working just a little bit more at home, having that flexibility to work more at home. And when people work more at home, you eat more breakfast and lunches at home. And that's going to drive more in-home consumption.

So the broad theme I'll leave you with is what we're excited about is this notion of in-home consumption, either cooking at home or eating at home, both of which drive more sales from people like us who carry a wider variety of fresh product.

JULIA LA ROCHE: Yeah, I think I heard you on the call talking about the fresh product, also even cereal coming back. Let's talk about the path forward for folks in general and the rollout of the vaccine. I know Albertson's is going to play a critical role in that, especially with your drug retail pharmacy footprint.

So on that front, how are you thinking about the deployment of the vaccine, and also I suppose, hiring folks who can administer this vaccine? What is kind of the challenge you have to overcome there? And then as a large employer, thinking about your frontline workers getting vaccinated.

VIVEK SANKARAN: A hugely important topic. We are-- as of today, we have 11,000 pharmacists and pharmacy technicians who are capable and ready to dispense the vaccine. And as of today, we've dispensed about 45,000. It's a very, very small portion of the capacity that we have. That's less than 5% of the capacity we have in terms of dispensing the vaccine.

And so we are ready with the technology, with the applications for you to go in and order it. In fact, we released one today where you can go sign up for it. But we don't have enough vaccines. And I think the biggest challenge we have collectively is for the state, local, and federal government to work together to make sure we have standard policies on who gets what when, and then to unleash it, to let the supply chain get the vaccines to folks like us and others in our markets who can dispense it. That's the priority.

And it's the same thing with our workforce. You know, when we are eligible for it, we will dispense it internally for our workforce too. And we think there'll be a great uptake, because a lot of people are getting educated on it. And you're seeing the willingness to take it continue to go up in the country.

ADAM SHAPIRO: Vivek, I'm looking at the stores in your portfolio. Who doesn't know Jewel-Osco in Chicago, Shaw's in Maine? Everyone knows Safeway. How do you compete, though? How do you grow your margins when you have all of these really relevant brands that people relate to at a local level, yet you're up against a giant like Amazon and Whole Foods because digital is now so predom-- prevalent?

VIVEK SANKARAN: Yes. So Adam, I think these banners-- you said it. Jewel-Osco, Shaw's-- they've been there for generations of shoppers. People have shopped over many, many years. And so there's something special about having those local banners that mean something to that local population.

And by the way, they've learned a lot about tailoring things really well for the local market. And that's some of the special sauce we have. And put on top of that our ability to bring a great fresh portfolio, an ability to offer a wide variety of product in the store so you can finish your shop in our store.

And then on top of that, when you have technology such as e-commerce, omnichannel capabilities such as ordering technologies and so on-- so from the front, it might look like different banners. And yes, there's a lot of localization. But the back-end is supported by a robust company-wide infrastructure. And that's how we get both the synergies and the localization.

And that works for us. If you're in one particular part of America, it becomes very difficult for you to be nuanced across the country. We can do that, because we begin from the front and then integrate at the back, if you think of it that way, to get scale.

SEANA SMITH: Vivek Sankaran, CEO of Albertsons, thank you so much for joining us. And of course, our thanks to Yahoo Finance correspondent Julia La Roche for joining the conversation as well.