Albertsons Companies, Inc. ( ACI ) shares surged more than 11% Tuesday after the supermarket chain beat second-quarter earnings and sales estimates, fueled by strong digital growth and rising identical-store sales, while simultaneously announcing a $750 million accelerated share repurchase and raising its full-year profit outlook.

The supermarket operator reported the second quarter adjusted earnings per share of 44 cents, beating the analyst consensus estimate of 40 cents.

Quarterly sales of $18.915 billion (+2% year over year) outpaced the Street view of $18.898 billion. Identical sales rose 2.2% (as adjusted), while digital sales jumped 23%.

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Management Commentary and Performance Metrics

“Our productivity engine continued to offset inflationary pressures and fund investments in areas that matter most to our customers, including fresh categories and omnichannel convenience,”  said Susan Morris, Chief Executive Officer.

Gross margin rate fell to 27.0% from 27.6% year over year. Excluding fuel and LIFO, gross margin decreased by 63 basis points. The decline reflects a higher pharmacy mix and rising delivery/handling costs from digital growth.

The firm said it made incremental investments in its customer value proposition which were funded by the benefits from productivity initiatives.

Adjusted EBITDA was $848.4 million in the second quarter, versus $900.6 million in the year-ago period. The Adjusted EBITDA margin was 4.5% of net sales, down from 4.9% in the year-ago period.

Capital Allocation and Shareholder Returns

On October 14, the company entered an accelerated share repurchase (ASR) with JPMorgan to buy back $750 million of common stock.

That same day, the Board increased the total share repurchase authorization from $2.0 billion to $2.75 billion, including the ASR.

On October 14, the company declared a 15 cents per-share quarterly dividend, payable November 7, to shareholders of record on October 24.

The company exited the quarter with cash and equivalents worth $270.6 million.

Outlook

Albertsons Companies ( ACI ) raised its fiscal 2025 adjusted EPS outlook to $2.06–$2.19 from $2.03–$2.16, versus the $2.10 analyst estimate.

The company expects Adjusted EBITDA of $3.8–$3.9 billion. This guidance includes about $65 million from the 53rd week.

Price Action: ACI shares are trading higher by 11.65% to $18.93 at last check Tuesday.

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