02:54 PM EDT, 07/16/2025 (MT Newswires) -- Albertsons ( ACI ) reported better-than-expected fiscal Q1 results on strong pharmacy sales, though it continues to grapple with a shifting pharmacy product mix and significant business reinvestments, RBC Capital Markets said in a report Wednesday.

The food and drug retailer reported Tuesday fiscal Q1 adjusted earnings of $0.55 per share, down from $0.66 a year earlier, while revenue rose to $24.88 billion from $24.27 billion. Analysts polled by FactSet expected adjusted EPS of $0.53 on revenue of $24.71 billion.

Albertsons ( ACI ) posted a 2.8% year-over-year increase in Q1 identical sales, outpacing the consensus estimate of 2.1%, according to the note. The sales performance led the investment bank to revise its fiscal Q2 identical sales estimate upward to 1.8% from a prior forecast of 0.5%, and raise its forecast on Q2 adjusted earnings before interest, taxes, depreciation, and amortization to $847 million from $816 million, the report said.

Despite the better-than-expected Q1 results, the company's management expects a "soft 2Q ID sales guide" due to price investments and pharmacy mix shifts. A key concern is the rise of less profitable GLP-1 drug sales within its pharmacy segment, which "are not profitable at this point," threatening overall pharmacy margins, the report said.

While Albertsons ( ACI ) has made "substantial improvements," profitability is "likely to remain pressured from mix shift toward pharmacy and price investment" in the short term, RBC said.

RBC has an outperform rating on Albertsons ( ACI ) with a $23 price target.

Shares of Albertsons ( ACI ) were down 1.2% in recent Wednesday trading.

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