ACI 10-K & 10-Q changes, risk factors and insider trading
Albertsons Companies, Inc. · NYSE · Retail-Grocery Stores · CIK 1646972 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “We may be unable to achieve our corporate social responsibility and sustainability goals.”
New heading “A significant majority of our employees are unionized, and our relationship with unions, including labor disputes or work stoppages, as well as related and other pensions expenses could have an adverse impact on our operations and financial results.”
Removed heading “We may be adversely impacted by environmental, social and governance matters, including inability to meet goals and commitments that we establish in relation to such matters.”
Removed heading “Risks Relating to the Terminated Merger with Kroger”
Removed heading “Our inability to execute on our standalone business strategies following the termination of the Merger Agreement could have a material adverse effect on our business, results of operations, and financial condition.”
Removed heading “The termination of the Merger Agreement and the related legal proceedings may cause us to incur substantial costs and could otherwise adversely affect our business, financial results and operations.”
Removed heading “Risks Related to Our Workforce”
Removed heading “A significant majority of our employees are unionized, and our relationship with unions, including labor disputes or work stoppages, could have an adverse impact on our operations and financial results.”
Removed heading “Increased pension expenses, contributions and surcharges may have an adverse impact on our financial results.”
Removed heading “Wages continue to increase and are subject to factors outside of our control. Changes to wage regulations could have an impact on our future results of operations.”
Largest changes
“As disclosed elsewhere in this Form 10-K, the Company has filed a lawsuit against Kroger in the Delaware Court of Chancery, bringing claims for willful breach of contract and breach of the covenant of good faith and fair dealing arising from Kroger's failure to exercise "best efforts" and to take "any and all actions" to secure regulatory approval, as was required of Kroger under the terms of the Merger Agreement. …”see in full comparison
“As of February 28, 2026, approximately 190,000 of our employees were covered by collective bargaining agreements. During fiscal 2025, collective bargaining agreements covering approximately 126,000 employees expired and were successfully renegotiated. In fiscal 2026, collective bargaining agreements covering approximately 22,000 employees are scheduled to expire. We currently contribute to 28 multiemployer pension plans for a substantial majority of employees represented by unions pursuant to collective bargaining agreements that require us to contribute to these plans. …”see in full comparison
“A significant majority of our employees are unionized, and our relationship with unions, including labor disputes or work stoppages, as well as related and other pensions expenses could have an adverse impact on our operations and financial results.”see in full comparison
“A significant majority of our employees are unionized, and our relationship with unions, including labor disputes or work stoppages, could have an adverse impact on our operations and financial results.”see in full comparison
“Wages continue to increase and are subject to factors outside of our control. Changes to wage regulations could have an impact on our future results of operations.”see in full comparison
We operate our business within strict and complex regulatorysee in full comparisonenvironmentsenvironments, which includes laws and regulations involving antitrust and competition, privacy, data protection, environmental, healthcare, anti-bribery, anti-corruption, tax, accounting, financial reporting, health and sanitation standards, food labeling and safety, prescriptions, controlled substances, zoning, vehicle operations, fuel operations, equal employment opportunity, minimum wages and licensing for the sale of food, drugs, and alcoholic beverages, among other matters, and we could be materially adversely affected by changes to, and/or any failure to comply with, existing and new legal requirements. In addition, our industry faces significant political, societal, and media scrutiny, and we may be subject to frequent or increasing challenges which may impact our reputation and business. Additionally, shifts in enforcement practices or regulatory scrutiny generally cannot be anticipated or predicted or our predictions may not be accurate. If we fail to predict or respond adequately to regulatory changes or expanding disclosure requirements, or do not respond as effectively as our competitors, our reputation, business, operations, and financial performance may be adversely affected. Political, governmental, and regulatory regimes and practices can evolve as a result of elections or other events beyond our control. Such changes, including those which have and may occur under the new administration, are unpredictable and may have negative impacts on our business and operations. Compliance with laws, regulations, policies, and enforcement practices may become challenging requiring operational changes which may be difficult to implement, increase our operating costs, require significant capital expenditures, or result in adverse publicity and harm our reputation.
Full comparison: every changed paragraph (38)
We compete within our industry not only for customers, but also for associates. We have faced a competitive labor market due to labor cost increases, labor shortages and turnover. Our inability to invest in, manage costs and keep pace with technological changes, including those adopted by our competitors, may adversely impact our business initiatives and affect our financial performance. We may be limited in our ability to implement automation-related technological changes or artificial intelligence in certain of our operations if we are unable to negotiate appropriate terms in our contracts with our labor unions. Our success is also dependent in large part upon our ability to maintain and enhance the goodwill and reputation of our banners, our customers’ connection to our banners, and a positive relationship with the communities in which we serve. Additionally, acts of violence at, or threatened against, our stores, including active shooter situations, may, in addition to other operational impact, result in damage and restricted access to our stores and/or store closures for short or extended periods of time, all of which could materially adversely affect our financial performance.
We may be unable to achieve our corporate social responsibility and sustainability goals.
We may be adversely impacted by environmental, social and governance matters, including inability to meet goals and commitments that we establish in relation to such matters.
In recent years, there has been focus from investors, governmental and nongovernmental entities, associates and the public on environmental,corporate social responsibility and governance ("ESG")sustainability matters, including greenhouse gas emissions, renewable energy, packaging and waste, practices related to sustainable supply chain, energy and water use, human rights, animal rights and social commitment. A variety of organizations evaluate, and measure the performance of, companies on such ESG matters, and the results of these assessments can be widely publicized. We have historically established and publicly announced certain goals, commitments, and targets which we may change in the future. ExecutionOur ofability to set and execute on our ESGoperational strategies toand achieve these goals, commitments, and targets are subject to risks and uncertainties, many of which may be outside of our control and prove to be more costly than we anticipated. These risks and uncertainties include, but are not limited to, our ability to achieve our goals, commitments, and targets within the currently projected costs and the expected timeframes; governmental and nongovernmental responses to certain ESG goals; unforeseen operational and technological difficulties; changes in investment assessments or increases in projected investments and our ability to invest accordingly; changes in frameworks we have agreed to; actions by our competitors in setting or achieving similar goals; the outcome of research efforts and future technology developments; and the success of our collaborations with third parties. Any failure, or perceived failure, to achieve our ESGsocial responsibility and sustainability goals, commitments, and targets, or perceived lack of intensity of our commitment to ESGthese initiatives or to otherwise meet evolving and varied stakeholder expectations could damage our reputation and customer, investor and other stakeholder relationships,relationships. In addition, we could face increased regulatory, reputational and maylegal evenscrutiny as a result inof our corporate social responsibility and sustainability related commitments and disclosures, and we could also face challenges with managing conflicting regulatory enforcement action. Our ESG commitments may also encounter pushback from parties with "anti-ESG" sentiments, which could subject us to scrutinyrequirements and reputationalour harm.various stakeholders' expectations. Such conditions could have an adverse effect on our business, results of operations and financial condition.
Our ability to continue to conduct and expand our operations and the acceleration of our business strategy depends on our ability to attract and retain a large and growing number of qualified associates. The food retail industry is labor intensive. Our ability to meet our labor needs, including our ability to find qualified personnel to fill positions that become vacant at our existing stores and distribution centers, while controlling our associate wage and related labor costs, is subject to numerous external factors, including the availability of qualified persons in the workforce in the local markets in which we are located, unemployment levels within those markets, prevailing wage rates, changing demographics, attitudes toward employment in the food and drug retail industry, the perception of our corporate values and business strategy, health and other insurance costs and adoption of new or revised employment and labor laws and regulations. Such laws related to employee hours, wages, job classification and benefits could significantly increase our operating costs. In the event of increasing wage rates, if we fail to increase our wages competitively, the quality of our workforce could decline, causing our customer service to suffer, while increasing wages for our employees could cause our costs to increase. If we are unable to locate, to train, to attract or to retain qualified personnel capable of meeting our business needs and expectations, the quality of service we provide to our customers may decrease and our business, financial performance and brand image may be adversely affected. Any failure to meet our staffing needs or any material increase in turnover rates of our employees may adversely affect our business, results of operations and financial condition. We believe that our success is directly linked to the competent people in the Company, including our executive officers and other key personnel. Personnel turnover can be costly and could materially and adversely impact our operating results and potentially jeopardize the success of our business strategy. Our business and operating results may be adversely impacted if we fail to retain and recruit key personnel.
A significant majority of our employees are unionized, and our relationship with unions, including labor disputes or work stoppages, as well as related and other pensions expenses could have an adverse impact on our operations and financial results.
As of February 28, 2026, approximately 190,000 of our employees were covered by collective bargaining agreements. During fiscal 2025, collective bargaining agreements covering approximately 126,000 employees expired and were successfully renegotiated. In fiscal 2026, collective bargaining agreements covering approximately 22,000 employees are scheduled to expire. We currently contribute to 28 multiemployer pension plans for a substantial majority of employees represented by unions pursuant to collective bargaining agreements that require us to contribute to these plans. In future negotiations with labor unions, we expect that health care, pension costs and/or contributions and wage costs, among other issues, will be important topics for negotiation. If, upon the expiration of such collective bargaining agreements, we are unable to negotiate acceptable contracts with labor unions, it could result in strikes by the affected workers and significantly disrupt our operations. As part of our collective bargaining agreements, we may need to fund additional pension contributions, which would negatively impact our operating costs. In the event we were to exit certain markets or otherwise cease contributing to multiemployer plans, we could trigger a substantial withdrawal liability. Such withdrawal liability may have a material adverse impact on our financial results. We are also the sponsors of defined benefit retirement plans for certain employees. The funded status of these plans is a significant factor in determining annual pension expense and cash contributions to fund the plans. Unfavorable investment performance, increased pension expense and cash contributions may have an adverse impact on our financial results. For additional information, see "Part II—Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Multiemployer Pension Plans."
We have evaluated in the past, and may evaluate in the future, certain strategic transactions with complementary businesses, services, or technologies as part of our overall growth strategy. These strategic transactions may involve significant risks, including but not limited to: the need for substantial financial investment; the diversion of management’s attention and resources from our existing operations; challenges in integrating acquired businesses or realizing expected synergies; the need to obtain costly or time-consuming regulatory approvals; potential negative perception by our customers, shareholders and the broader market; and exposure to contingent or unexpected liabilities, any of which could adversely impact our business, results of operations, financial condition and future prospects.
Our continued success to effectively compete in the food retail industry is dependent upon our ability to control operating expenses, replicate competitor capabilities, make appropriate investments, manage product and labor costs in an increasingly competitive labor market and health care and pension costs stipulated by our collective bargaining agreements. Several of our primary competitors are larger than we are, or are not subject to collective bargaining agreements. This allows them to more effectively leverage their fixed costs or more easily reduce operating expenses. Changes in our product mix also may negatively affect our profitability. Our inability to adequately control and prevent shrink has impacted our results of operations and could impact our results of operations in the future. Failure to accomplish our objectives could impair our ability to compete successfully and adversely affect our profitability. Profit margins in the food retail industry are low. In order to increase or maintain our profit margins, we develop operating strategies to increase revenues, increase gross margins and reduce costs, such as our business strategy, new marketing programs, new advertising campaigns, productivity improvements, shrink-reduction initiatives, distribution center efficiencies, manufacturing efficiencies, energy efficiencies and other similar strategies.strategies and value-creating initiatives. Our failure to achieve forecasted revenue growth, gross margin improvement or cost reductions could have a material adverse effect on our profitability and operating results.
WeFailure may notto timely identify or effectively respond to evolving consumer trends,preferences, whichincluding changes in how customers use digital and AI-driven tools, could negativelyadversely affect our relationshipcustomer with our customers, therelationships, demand for our products and services and our market share.
Because we face intense competition, our success depends, in part, on effectively anticipating evolving trends in demographics and responding to changing consumer preferences and demands. It is difficult to predict consistently and successfully the products and services our customers will demand over time. Failure to timely identify or effectively respond to changing consumer tastes, preferences and spending patterns could lead us to offer our customers a mix of products, methods to purchase products or a level of pricing that they do not find attractive. This could negatively affect our relationship with our customers, leading them to reduce their visits to our stores, purchase less through other methods and decrease the amount they spend. Further, while we have significantly expanded our digital capabilities and grown our loyalty programs over the last several years, as technology advances, and as the way our customers interact with technology changes, we will need to continue to develop and offer digital, loyalty and media solutions that are both cost effective and compelling to our customers. Our failure to anticipate or respond to customer expectations for products, services, digital and loyalty programs could negatively affect the demand for our products and services and our market share which may adversely impact our financial condition and results of operations.
In addition, advances in technology are changing how customers interact with retailers and make purchasing decisions. The emergence of artificial intelligence‑powered agentic shopping tools, through which AI agents autonomously research, compare and purchase products on behalf of consumers, could further disrupt traditional grocery retail. If customers increasingly rely on these tools and AI agents prioritize factors such as price or speed over retailer preference or brand loyalty, we could lose our direct relationship with customers. This could reduce our visibility into customer behavior, increase margin pressure, and limit our ability to influence purchasing decisions.
These developments could negatively affect our relationship with customers, leading them to reduce their visits to our stores, shift purchases to other channels or methods, and decrease the amount they spend with us. Further, while we have significantly expanded our digital capabilities and grown our loyalty programs over the last several years, as technology continues to evolve and customer expectations change, we will need to continue to develop and offer digital, loyalty, media and other technology‑enabled solutions that are both cost effective and compelling. Failure to anticipate or respond to customer expectations for products, services, digital capabilities, loyalty programs or emerging purchasing technologies could negatively affect demand for our products and services and our market share, which may adversely impact our financial condition and results of operations.
ConsolidationChanges in the healthcare industry could adversely affect our financial condition and results of operations.
Many organizations in the healthcare industry have consolidated to create larger healthcare enterprises with greater market power, which has resulted in increased pricing pressures. If this consolidation trend continues, it could give the resulting enterprises even greater bargaining power, which may lead to further pressure on the prices for our pharmacy products and services. If these pressures result in reductions in our prices, we will become less profitable unless we are able to achieve corresponding reductions in costs, increase productivity or develop profitable new revenue streams. We expect that market demand, government regulation, third-party reimbursement policies, government contracting requirements, direct-to-consumer sales of prescription drugs, growth in online pharmacies, litigation and societal pressures will continue to cause the healthcare industry to evolve, potentially resulting in further business consolidations and alliances among the industry participants we engage with, which may adversely impact our financial condition and results of operations. In addition, the Inflation Reduction Act of 2022 established the Medicare Drug Negotiation Program, which authorizes the federal government to directly negotiate prices for certain prescription drugs reimbursed under Medicare Part B and Part D. The program became effective in 2026 and, while initially limited, is expected to expand over time to include up to 100 drugs by 2031. The drugs subject to future negotiation, the prices ultimately established, and the broader effects on commercial pricing, reimbursement structures, and customer purchasing behavior remain uncertain. As a result, the program could negatively impact the Company's revenues, profitability, and overall financial condition or results of operations. Any expansion of the program or adoption of similar pricing mechanisms by other government or private payers could further increase these risks.
Reflecting consumer preferences, we have a significant focus on fresh products. We rely on various suppliers and vendors to provide and deliver our fresh and other product inventory on a continuous basis and to supply the raw materials to manufacture certain of our Own Brands products. We could suffer significant fresh and other product inventory losses and significant lost revenue in the event of the loss or a shutdown of a major supplier or vendor, disruption of our distribution network, extended power outages, natural disasters, current and future tariffs arising from international trade disputes, foreign conflictsconflicts, acts of war or terrorism, disruptive political events or other catastrophic or unexpected occurrences such as a pandemic like COVID-19. We expect our suppliers to comply with applicable laws, including labor, safety and environmental laws. Our ability to find qualified suppliers who uphold our standards and requirements for products, including fresh, and to access such products in a timely and operationally efficient manner in volumes we may demand may become a significant challenge.
We currently operate 405 fuel centers that are adjacent to many of our store locations. As a result, we sell a significant amount of gasoline and diesel fuel. Increased regulation or significant increases in wholesale fuel costs and fuel taxes could result in lower gross margins on fuel sales, and demand could be negatively impacted by retail price increases as well as by concerns about the effect of emissions on the environment. We are unable to predict future regulations, environmental effects, political unrest, geopolitical tensions, hostilities or boycotts, acts of war or terrorism, the actions of major oil producing countries to regulate oil productionproduction, or the acts of countries to disrupt the distribution of oil, and other matters that may affect the cost and availability of fuel, and how our customers will react to any of the preceding matters, which could adversely affect our results of operations.
Many of our own and sourced products include ingredients such as wheat, corn, oils, milk, sugar, proteins, cocoa and other commodities. Commodity prices can be volatile and can be impacted by globalgeopolitical conflicts such as the impact on wheat and corn prices by the armed conflict between Russia and Ukrainerisks and tariffs arising from international trade disputes, trade wars and inflation. For example, the recently implemented tariffs on products imported from certain countries may increase commodity prices for products. Any increase in commodity prices may cause an increase in our input costs or the prices our vendors seek from us. Although we typically are able to pass on modest commodity price increases or mitigate vendor efforts to increase our costs, we may be unable to continue to do so, either in whole or in part, if commodity prices increase materially or there are significant inflationary pressures. If we are forced to increase prices, our customers may reduce their purchases at our stores or trade down to less profitable products. Both may adversely impact our profitability as a result of reduced revenue or reduced margins.
Risks Relating to the Terminated Merger with Kroger
Our inability to execute on our standalone business strategies following the termination of the Merger Agreement could have a material adverse effect on our business, results of operations, and financial condition.
From October 2022 to December 2024, the uncertainties and restrictions on our business imposed by the Merger Agreement limited us from pursuing certain business opportunities and taking actions which may have been beneficial to our business and operations during this period. If we are unable to successfully optimize the acceleration of our Customers for Life strategy and other value-creating initiatives after the termination of the Merger Agreement, our business, operating results or financial condition could be materially adversely affected.
The termination of the Merger Agreement and the related legal proceedings may cause us to incur substantial costs and could otherwise adversely affect our business, financial results and operations.
As disclosed elsewhere in this Form 10-K, the Company has filed a lawsuit against Kroger in the Delaware Court of Chancery, bringing claims for willful breach of contract and breach of the covenant of good faith and fair dealing arising from Kroger's failure to exercise "best efforts" and to take "any and all actions" to secure regulatory approval, as was required of Kroger under the terms of the Merger Agreement. Kroger also delivered a termination notice to the Company, alleging that the Company's termination notice was not effective, and that Kroger had no obligation to pay the $600 million termination fee because the Company allegedly failed to perform and comply in all material respects with its covenants under the Merger Agreement. Kroger has also filed counterclaims against us for alleged breaches of the Merger Agreement. In addition to our litigation with Kroger, we may face other lawsuits related to the terminated Merger. We intend to vigorously defend against these and any other legal proceedings arising from the terminated Merger Agreement, but due to the uncertainties inherent in any legal proceedings, we cannot predict an outcome. Also, legal proceedings are expensive and could result in significant costs to us, including any costs we may be required to pay in connection with the legal proceedings with Kroger. These significant costs, along with our inability to collect the termination fee of $600 million from Kroger could have a material adverse effect on our business, operating results, and financial condition.
Risks Related to Our Workforce
A significant majority of our employees are unionized, and our relationship with unions, including labor disputes or work stoppages, could have an adverse impact on our operations and financial results.
As of February 22, 2025, approximately 195,000 of our employees were covered by collective bargaining agreements. During fiscal 2024, collective bargaining agreements covering approximately 17,500 employees expired and were successfully renegotiated. In fiscal 2025 collective bargaining agreements covering approximately 120,000 employees are scheduled to expire. In future negotiations with labor unions, we expect that health care, pension costs and/or contributions and wage costs, among other issues, will be important topics for negotiation. If, upon the expiration of such collective bargaining agreements, we are unable to negotiate acceptable contracts with labor unions, it could result in strikes by the affected workers and significantly disrupt our operations. As part of our collective bargaining agreements, we may need to fund additional pension contributions, which would negatively impact our operating costs.
Increased pension expenses, contributions and surcharges may have an adverse impact on our financial results.
We currently contribute to 27 multiemployer pension plans for a substantial majority of employees represented by unions pursuant to collective bargaining agreements that require us to contribute to these plans. Under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), the Pension Benefit Guaranty Corporation (the "PBGC") has the authority to petition a court to terminate an underfunded pension plan in limited circumstances. In the event that our defined benefit pension plans are terminated for any reason, we could be liable for the entire amount of the underfunding, as calculated by the PBGC based on its own assumptions (which would result in a larger obligation than that based on the actuarial assumptions used to fund such plans). Under ERISA and the Internal Revenue Code, as amended (the "Code"), the liability under these defined benefit plans is joint and several with all members of our control group (participating ACI consolidated subsidiaries), such that each member of our control group is potentially liable for the defined benefit plans of each other member of the control group.
Based on an assessment of the most recent information available, we believe that a majority of the multiemployer plans to which we contribute are underfunded, which is the amount by which the actuarial determined plan liabilities exceed the value of the plan assets. We are only one of a number of employers contributing to these plans and the underfunding of any of these plans to which we contribute are not our liability. Though we are not obligated nor the guarantor for any of the underfunding of multiemployer plans to which we contribute, as of December 31, 2024, we attempted to estimate our allocable share of the underfunding of multiemployer plans to which we contribute, based on the ratio of our contributions to the total of all contributions to these plans in a year. Our estimate is based on the most current information available to us including actuarial evaluations and other data (that includes the estimates of others), and such information may be outdated or otherwise unreliable. Our estimate could also change based on the amount contributed to the plans, investment returns on the assets held in the plans, actions taken by trustees who manage the plans' benefit payments, interest rates, the amount of withdrawal liability payments made to the plans, if the employers currently contributing to these plans cease participation, and requirements under the Pension Protection Act of 2006, the Multiemployer Pension Reform Act of 2014 and applicable provisions of the Code.
Our estimate of the Company's allocable share of the underfunding of multiemployer plans to which we contribute was approximately $4.9 billion. The American Rescue Plan Act ("ARP Act") established a special financial assistance program for financially troubled multiemployer pension plans. Under the ARP Act, eligible multiemployer plans can apply to receive funding in the amount needed to pay pension benefits through the plan year ending 2051. We participate in 15 multiemployer plans eligible for the special financial assistance, of which four have received special financial assistance funds as of February 22, 2025, reducing our estimated $4.9 billion allocable share of the underfunding to approximately $3.6 billion. For additional information, see "Part II—Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Multiemployer Pension Plans."
In the event we were to exit certain markets or otherwise cease contributing to multiemployer plans, we could trigger a substantial withdrawal liability. Such withdrawal liability may have a material adverse impact on our financial results. We are also the sponsors of defined benefit retirement plans for certain employees. The funded status of these plans is a significant factor in determining annual pension expense and cash contributions to fund the plans. Unfavorable investment performance, increased pension expense and cash contributions may have an adverse impact on our financial results.
Wages continue to increase and are subject to factors outside of our control. Changes to wage regulations could have an impact on our future results of operations.
A considerable number of our employees are paid at rates related to the federal minimum wage. Additionally, many of our stores are located in localities or states where the minimum wage is greater than the federal minimum wage and where a considerable number of employees receive compensation equal to the state's minimum wage which are also slated to increase over the next few years. Moreover, municipalities may set minimum wages above the applicable state standards. Increases in the federal minimum wage or the enactment of additional state or local minimum wage increases are increasing our labor costs, which may adversely affect our results of operations and financial condition.
The food retail industry is labor intensive. Our ability to meet our labor needs, while controlling wage and labor-related costs, is subject to numerous external factors, including the availability of qualified persons in the workforce in the local markets in which we are located, unemployment levels within those markets, prevailing wage rates, changing demographics, attitudes toward employment in the food and drug retail industry, the perception of our corporate values and business strategy, health and other insurance costs and changes in employment and labor laws. Such laws related to employee hours, wages, job classification and benefits could significantly increase our operating costs. In the event of increasing wage rates, if we fail to increase our wages competitively, the quality of our workforce could decline, causing our customer service to suffer, while increasing wages for our employees could cause our gross margins to decrease. If we are unable to hire and retain employees capable of meeting our business needs and expectations, our business and brand image may be impaired. Any failure to meet our staffing needs or any material increase in turnover rates of our employees may adversely affect our business, results of operations and financial condition.
Our ability to continue to conduct and expand our operations depends on our ability to attract and retain a large and growing number of qualified associates. Our ability to meet our labor needs, including our ability to find qualified personnel to fill positions that become vacant at our existing stores and distribution centers, while controlling our associate wage and related labor costs, is generally subject to numerous external factors, including the availability of a sufficient number of qualified persons in the work force of the markets in which we operate, unemployment levels within those markets, prevailing wage rates, changing demographics, attitudes toward employment in the food and drug retail industry, the perception of our corporate values and business strategy, health and other insurance costs and adoption of new or revised employment and labor laws and regulations. If we are unable to locate, to train, to attract or to retain qualified personnel, the quality of service we provide to our customers may decrease and our financial performance may be adversely affected. We believe that our success is directly linked to the competent people in the Company, including our executive officers and other key personnel. Personnel turnover can be costly and could materially and adversely impact our operating results and potentially jeopardize the success of our Customers for Life strategy. Our business and operating results may be adversely impacted if we fail to retain and recruit key personnel.
We operate our business within strict and complex regulatory environmentsenvironments, which includes laws and regulations involving antitrust and competition, privacy, data protection, environmental, healthcare, anti-bribery, anti-corruption, tax, accounting, financial reporting, health and sanitation standards, food labeling and safety, prescriptions, controlled substances, zoning, vehicle operations, fuel operations, equal employment opportunity, minimum wages and licensing for the sale of food, drugs, and alcoholic beverages, among other matters, and we could be materially adversely affected by changes to, and/or any failure to comply with, existing and new legal requirements. In addition, our industry faces significant political, societal, and media scrutiny, and we may be subject to frequent or increasing challenges which may impact our reputation and business. Additionally, shifts in enforcement practices or regulatory scrutiny generally cannot be anticipated or predicted or our predictions may not be accurate. If we fail to predict or respond adequately to regulatory changes or expanding disclosure requirements, or do not respond as effectively as our competitors, our reputation, business, operations, and financial performance may be adversely affected. Political, governmental, and regulatory regimes and practices can evolve as a result of elections or other events beyond our control. Such changes, including those which have and may occur under the new administration, are unpredictable and may have negative impacts on our business and operations. Compliance with laws, regulations, policies, and enforcement practices may become challenging requiring operational changes which may be difficult to implement, increase our operating costs, require significant capital expenditures, or result in adverse publicity and harm our reputation.
In the course of conducting our business, arising in or outside of the ordinary course, we are and may become a party to various legal proceedings, including lawsuits related to the termination of the merger agreement with Kroger, class actions in matters involving personnel and employment issues, federal and state wage and hour laws, personal injury, antitrust claims based on both federal and state law, packaging or product claims, claims related to the sale of drug or pharmacy products, such as opioids, claims invoking consumer-protection statutes, intellectual property claims and fiduciary and securities claims. We may also become subject to governmental and regulatory inquiries related to our operations. We estimate our exposure to legal proceedings and establish reserves for the estimated liabilities. We are unable to predict the outcome of any litigation, investigation or any action by governmental entities and can provide no assurance as to the scope and outcome of these matters and whether our business, financial position, results of operations or cash flows will not be materially adversely affected. In addition, legal proceedings are expensive and could result in significant costs to us, including any costs we may be required to pay in connection with the legal proceedings with Kroger. These significant costs, along with our inability to collect the termination fee of $600 million from Kroger, could have a material adverse effect on our business, operating results, and financial condition.
Risks Related to Information Security, Cybersecurity, Data Privacy and EvolvingArtificial Intelligence Technologies
Management's Discussion & Analysis (MD&A)
Removed heading “Termination of the Merger Agreement”
Largest changes
“Technology and AI are an important component of our transformation and long-term growth strategy. In the digital customer experience, AI-driven capabilities are helping to modernize the way customers shop, delivering increased personalization intended to drive engagement, basket size and loyalty. Our AI-enabled shopping assistant continues to evolve as customer adoption increases. …”see in full comparison
“On February 2, 2026, the Company and certain of its subsidiaries (the "Subsidiary Co-Issuers") completed the issuance of $1,200.0 million in aggregate principal amount of 5.625% senior unsecured notes due March 31, 2032 (the "2032 Notes") and $900.0 million in aggregate principal amount of additional 5.750% 2034 Notes, as defined below (the "Additional 2034 Notes" and together with the 2032 Notes, the "New Notes"). The Additional 2034 Notes were issued as "additional securities" under the indenture governing the outstanding 2034 Notes. …”see in full comparison
For fiscal 2025, net gain on property dispositions and impairment losses was $12.2 million, driven by $59.8 million of net gains primarily from the sale of real estate assets, partially offset by $28.4 million of retail store impairment losses and $19.2 million from the impairment and disposal of certain technology assets. For fiscal 2024, net loss on property dispositions and impairment losses was $95.8 million, primarily driven by $104.2 million of asset impairments including impairment losses of $60.9 million of retail store impairment losses, $39.8 million primarily related to equipment from the closing of our micro-fulfillment centers and $3.5 million related to certain technology assets, partially offset by $8.4 million of net gains from the sale of real estate assets.see in full comparisonFor fiscal 2023, net loss on property dispositions and impairment losses was $43.9 million, primarily driven by the impairment and disposal of certain technology assets, partially offset by net gains from the sale of assets.
“(2) Fiscal 2025 primarily relates to litigation costs and retention program expense related to the terminated merger. Fiscal 2024 and fiscal 2023 primarily include third-party legal and advisor fees and retention program expense related to the merger.”see in full comparison
“•Net income of $217 million, or $0.40 per Class A common share, inclusive of the $600 million charge, net of tax, or $(1.10) per Class A common share, related to the Opioid Settlement Framework (as defined herein)”see in full comparison
Full comparison: every changed paragraph (65)
We are one of the largest food retailers in the United States, with 2,2702,244 stores across 3435 states and the District of Columbia as of February 22,28, 2025.2026. We operate more than 2022 well known banners including Albertsons, Safeway, Vons, Pavilions, Randalls, Tom Thumb, Carrs, Jewel-Osco, ACME, Shaw's, Star Market, United Supermarkets, Market Street, Haggen, Kings Food Markets and Balducci's Food Lovers Market, with approximately 285,000280,000 talented and dedicated employees, as of February 22,28, 2025,2026, who serve on average 36.236.5 million customers each week. Additionally, as of February 22,28, 2025,2026, we operated 1,7281,713 in-store pharmacies, 1,3131,240 in-store branded coffee shops, 405 associated fuel centers, 22 dedicated distribution centers, 19 manufacturing facilities and various digital platforms.
During fiscal 2024,2025, we continued to execute on our Customers for Lifebusiness strategy, which is centered around driving customer growth and engagement through digital connection,connection and loyalty, expanding our Media Collective, enhancing the customer value proposition, modernizing capabilities through technology and AI, and driving transformational productivity. We continue to invest in growth through our four digital platforms of eCommerce, Loyalty, Pharmacy & Health and the use of our mobile app in our stores. Collectively,This theseintegrated digitalecosystem platformsis generateintended deeperto enhance our ability to innovate, improve marketing efficiency, and support revenue growth over time, while strengthening customer engagement, increase digital inventoryengagement and enrich our data to accelerate growth in the Albertsons Media Collective ("AMC"). We continue to invest significantly in AMC, building industry-leading technologies to expand the reach of our brand and fuel one of the largest opportunities for reinvestment into our core business.loyalty.
Identical sales, excluding fuel, increased 2.0% during fiscal 2025. Our digital investments are continuing to drive engagement, customer acquisition and retention. During fiscal 2025, digital sales, which include Drive Up & Go curbside pickup and home delivery, increased 21% compared to fiscal 2024 as we continue to elevate our customer experience. In loyalty, membership grew 12% to 51.2 million in fiscal 2025 compared to fiscal 2024, while program enhancements and simplification continue to fuel deeper engagement through more frequent transactions and easier reward redemption. During fiscal 2025, in-store pharmacy sales were influenced by evolving regulatory and reimbursement dynamics, while management actions remained focused on improving underlying profitability, operational efficiency and customer engagement Our customer value proposition focuses on making shopping more affordable, intuitive and personalized across our markets. By combining data-driven personalization with disciplined price investments, we aim to deliver clearer, more consistent value. Through targeted pricing actions, improved loyalty-driven promotions and continued Own Brands innovation, we are reinforcing trust with customers who increasingly expect transparency and consistency in their weekly shop. These efforts are designed to support both value perception and longer-term margin sustainability.
Technology and AI are an important component of our transformation and long-term growth strategy. In the digital customer experience, AI-driven capabilities are helping to modernize the way customers shop, delivering increased personalization intended to drive engagement, basket size and loyalty. Our AI-enabled shopping assistant continues to evolve as customer adoption increases. As part of our investments in an AI-enabled supply chain, we have launched a proprietary forecasting capability we call Gateway to enhance replenishment performance and improve efficiency across promotional center store SKUs. Execution of these initiatives occurs within a dynamic macroeconomic and competitive environment and requires continued investment, discipline and adaptability.
Identical sales, excluding fuel, increased 2.0% during fiscal 2024. We continued to invest in new merchandising initiatives and our loyalty offerings, and we also deepened digital connection and engagement with our customers. During fiscal 2024, digital sales, which include Drive Up & Go curbside pickup and home delivery, increased 24% compared to fiscal 2023, as the expansion of our services and continued innovation in digital offerings resonated with customers. Loyalty members increased 15% to 45.6 million in fiscal 2024 compared to fiscal 2023.
Customer needs for value have evolved due to inflationary pressure and so have our strategies to address those needs as we work with our vendor partners to strategically invest in our customer value proposition in certain categories and markets. In Own Brands, we continue to focus on providing our customers with products they trust through innovation and offering products at an attractive price point. During fiscal 2024, we launched 279 new items, including new items in our Open Nature cauliflower pizza line and in our Signature Select ice cream assortment.
We endeavor to use technology in everything we do and over the last few years we have invested strategically to build a best-in-class technology platform, with our core infrastructure in the Cloud and a modernized scalable network. This advanced technology platform, on which we will continue to innovate, powers our eCommerce, store, pharmacy, supply chain, merchandising and AMC operations, and will allow us to leverage emerging technologies to accelerate our operational transformation going forward.
Our capital allocation strategy balances investing for the future, strengthening our balance sheet and returnsreturning capital to shareholders through a combination of dividends and opportunistic share repurchases. Capital expenditures were approximately $1,927.5$1,833.6 million during fiscal 2024,2025, primarily including the completion of 12794 remodels, the opening of 11nine new stores and continued investment in our digital and technology platforms. Capital returns to shareholders during fiscal 20242025 included $295.1$322.7 million of common stock dividends ($0.51$0.60 per common share) and the repurchaseinvestment of 4.1$1,492.5 million sharesfor the repurchase of common stockstock, for a totalinclusive of $82.5the million.$750 million ASR Agreement. On April 14, 2026, we increased the quarterly cash dividend from $0.15 per common share to $0.17 per common share. Also on April 14, 2026, we increased the remaining share repurchase authorization to $2.0 billion in total.
Termination of the Merger Agreement
As previously disclosed, on October 13, 2022, the Company, The Kroger Co. ("Kroger") and Kettle Merger Sub, Inc., a wholly owned subsidiary of Kroger ("Merger Sub"), entered into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which Merger Sub would have been merged with and into the Company (the "Merger"), with the Company surviving the Merger as the surviving corporation and a direct, wholly owned subsidiary of Kroger. On December 10, 2024, the United States District Court for the District of Oregon issued a preliminary injunction in the case Federal Trade Commission et al. v. The Kroger Company and Albertsons Companies, Inc. (Case No.: 3:24-cv-00347-AN), whereby the court enjoined the consummation of the Merger. In light of the preliminary injunction, and in accordance with Section 8.1(e) of the Merger Agreement, the Company exercised its right to terminate the Merger Agreement and sent a notice to Kroger on December 10, 2024 terminating the Merger Agreement. For additional information about the termination of the Merger Agreement and the Merger, see Part II—Item 8. Financial Statements and Supplementary Data—Note 2.
•Net income of $217 million, or $0.40 per Class A common share, inclusive of the $600 million charge, net of tax, or $(1.10) per Class A common share, related to the Opioid Settlement Framework (as defined herein)
•Net income of $959 million, or $1.64 per Class A common share
•Continued modernization of our store fleet, including completing 12794 remodels and opening 11nine new stores
Net sales and other revenue increased $1,153.2$2,781.6 million, or 1.5%,3.5%, to $83,172.5 million in fiscal 2025 from $80,390.9 million in fiscal 2024 from $79,237.7 million in fiscal 2023.2024. The increase in Net sales and other revenue in fiscal 20242025 as compared to fiscal 20232024 was driven by our 2.0% increase in identical sales, with growth in pharmacy sales being the primary driver of the identical sales increase, whileas well as the impact of the additional 53rd week. We also continued to grow our digital sales alsowith increaseda 24%21% increase during fiscal 2024.2025. TheThese increaseincreases in Net sales and other revenue waswere partially offset by a net reduction in sales driven by store closures since the fourth quarter of fiscal 2024 and lower fuel sales. The components of the change in Net sales and other revenue for fiscal 20242025 were as follows (in millions):
(4) Consists primarily of wholesale sales to third parties, commissions, rental income, media advertising revenue, rental incomerevenue and other miscellaneous revenue.
(5) Fiscal 2025 includes an estimated $1.4 billion of incremental Net sales and other revenue due to the additional 53rd week.
Gross margin rate decreased to 27.2% in fiscal 2025 compared to 27.7% in fiscal 2024 compared to 27.8% in fiscal 2023.2024. Excluding the impacts of fuel and LIFO, gross margin rate decreased 3459 basis points. TheThis decrease in gross margin rate was primarily driven by strong growth in pharmacy sales, which carries an overall lower gross margin rate, and increases in delivery and handling costs related to the 24%continued growth in our digital salessales. andWe investmentalso continue to make incremental investments in our customer value proposition which were thelargely primary drivers of the decrease, partially offsetfunded by the benefits from our productivity initiatives.
Selling and administrative expenses increased to 25.6%26.3% of Net sales and other revenue in fiscal 20242025 compared to 25.2%25.6% in fiscal 2023.2024. Excluding the impactimpacts of fuel,fuel and the Opioid Settlement Framework, Selling and administrative expenses as a percentage of Net sales and other revenue increaseddecreased 3438 basis points during fiscal 20242025 compared to fiscal 2023.2024. The increasedecrease in Selling and administrative expenses as a percentage of Net sales and other revenue was primarily attributable to an increase in operating expenses related to the ongoingsales developmentleveraging of our digital and omnichannel capabilities, Merger-related costs, increased business transformation costs, higher employee costs and increasedlower storeMerger-related occupancy costs including additional third-party store security services,costs, partially offset by thean increase in business transformation costs. The benefits from our productivity initiatives.initiatives continue to partially offset increasing wage rates and other inflationary pressures on our operating expenses.
Loss (Gain) Loss on Property Dispositions and Impairment Losses, Net
For fiscal 2025, net gain on property dispositions and impairment losses was $12.2 million, driven by $59.8 million of net gains primarily from the sale of real estate assets, partially offset by $28.4 million of retail store impairment losses and $19.2 million from the impairment and disposal of certain technology assets. For fiscal 2024, net loss on property dispositions and impairment losses was $95.8 million, primarily driven by $104.2 million of asset impairments including impairment losses of $60.9 million of retail store impairment losses, $39.8 million primarily related to equipment from the closing of our micro-fulfillment centers and $3.5 million related to certain technology assets, partially offset by $8.4 million of net gains from the sale of real estate assets. For fiscal 2023, net loss on property dispositions and impairment losses was $43.9 million, primarily driven by the impairment and disposal of certain technology assets, partially offset by net gains from the sale of assets.
Interest expense, net was $504.2 million in fiscal 2025 compared to $459.8 million in fiscal 2024 compared to $492.1 million in fiscal 2023.2024. The decreaseincrease in Interest expense, net was primarily attributable to lowerhigher average outstanding borrowings. The weighted average interest rate was 5.6% during both fiscal 2024 and fiscal 2023, excluding amortization of debt discounts and deferred financing costs.
For fiscal 2025, Other income, net was $44.4 million primarily driven by non-service cost components of net pension and post-retirement income, including $29.4 million of pension settlement income, and realized gains from non-operating investments, partially offset by unrealized losses from non-operating investments. For fiscal 2024, Other income, net was $43.4 million primarily driven by unrealized gains from non-operating investments and non-service cost components of net pension and post-retirement income.
For fiscal 2024, Other income, net was $43.4 million primarily driven by unrealized gains from non-operating investments and non-service cost components of net pension and post-retirement income. For fiscal 2023, Other income, net was $12.2 million primarily driven by non-service cost components of net pension and post-retirement income, realized gains from non-operating investments and income related to our equity interest and gain on sale of El Rancho during fiscal 2023, partially offset by realized and unrealized losses from non-operating investments.
Income tax expense was $50.4 million in fiscal 2025, representing an 18.8% effective tax rate. Income tax expense was $171.1 million,million in fiscal 2024, representing a 15.1% effective tax rate, in fiscal 2024, and $293.0 million, representing an 18.4% effective tax rate, in fiscal 2023.rate. The decreaseincrease in the effective income tax rate during fiscal 20242025 compared to fiscal 20232024 was primarily driven by the recognition of $81.0 million of discrete state income tax benefits related to auditthe settlements, compared to a reductionsettlement of a reserve of $49.7 million for an uncertain tax position due to the expiration of a foreign statuteaudits during the firstthird quarter of fiscal 2023.2024. Refer to "Part II—Item 8. Financial Statements and Supplementary Data—Note 9 - Income Taxes" for additional information on our effective tax rate.
Net income was $217.4 million or $0.40 per diluted share during fiscal 2025 compared to $958.6 million or $1.64 per diluted share during fiscal 20242024. comparedFiscal 2025 included the $599.8 million charge, net of tax, or $(1.10) per share loss related to $1,296.0the millionOpioid orSettlement $2.23 per diluted share during fiscal 2023.Framework. Fiscal 2024 included the $81.0 million or $0.14 per share benefit related to certain discrete state income tax benefits related to the settlement of audits, and fiscal 2023 included the $49.7 million or $0.09 per share benefit related to the reduction in the reserve for an uncertain tax position.audits. Adjusted net income was $1,209.3 million, or $2.18 per share, during fiscal 2025 compared to $1,382.4 million, or $2.34 per share, during fiscal 20242024. comparedAdjusted tonet $1,693.7 million, or $2.88income per share (which includes the $49.7 million tax benefit discussed above), during fiscal 2023.2025 includes an estimated incremental $0.03 per share related to the extra week in fiscal 2025.
Adjusted EBITDA was $3,901.5 million, or 4.7% of Net sales and other revenue, during fiscal 2025 compared to $4,004.7 million, or 5.0% of Net sales and other revenue, during fiscal 20242024. comparedThe increase in Adjusted EBITDA reflects an estimated incremental $68 million related to $4,317.7the million,extra orweek 5.4% of Net sales and other revenue, duringin fiscal 2023.2025.
(1) IncludesPrimarily includes costs associated with third-party consulting fees related to our Customersbusiness for Lifetransformation strategy and employee termination costs related to ouremployee reduction in workforce during the fourth quarter of fiscal 2024,terminations, as follows (see table below):
(2) Fiscal 2025 primarily relates to litigation costs and retention program expense related to the terminated merger. Fiscal 2024 and fiscal 2023 primarily include third-party legal and advisor fees and retention program expense related to the merger.
(2) Represents incremental COVID-19 related pay legislatively required in certain municipalities in which we operate.
(3) Primarily relates to third-party legal and advisor fees and retention program expense related to the Merger and costs in connection with our previously-announced Board-led review of potential strategic alternatives.
(43) Related toIncludes the Combined$773.8 Planmillion duringcharge in the secondfourth quarter of fiscal 2022.2025 Seerelated to the Opioid Settlement Framework. Refer to "Part II - —Item 8. Financial Statements and Supplementary Data - —Note 1112" for moreadditional information.
(i) Primarily includes adjustments for pension settlement loss, unconsolidated equity investments and other costs not considered in our core performance.
(5) Fiscal 2025 includes an estimated $68 million of incremental Adjusted EBITDA due to the impact of the additional 53rd week.
(7) Represents the conversion of Convertible Preferred Stock to the fully outstanding as-converted Class A common shares as of the end of each respective period, for periods in which the Convertible Preferred Stock is antidilutive under GAAP. Fiscal 2022 reflects the impact of the Special Dividend (as defined below) that is attributable to the holders of Convertible Preferred Stock on an as-converted basis.
(9) Adjusted net income per share for fiscal 2025 includes an estimated incremental $0.03 per share due to the impact of the additional 53rd week.
(d) Loss (gain) on interest rate swaps and energy hedges, net:
(ed) Depreciation and amortization:
(fe) Miscellaneous adjustments:
Net cash provided by operating activities was $2,366.7 million during fiscal 2025 compared to $2,680.6 million during fiscal 2024 compared to $2,659.5 million during fiscal 2023.2024. The increasedecrease in cash flow from operating activities during fiscal 20242025 compared to fiscal 20232024 was dueprimarily to less cash paid for taxes, legal settlements, multiemployer pension plan withdrawal liabilities and interest, partially offsetdriven by a decrease in Adjusted EBITDA,EBITDA higherand Merger-relatedincreases in cash paid for income and indirect taxes, insurance claims, operating leases and business transformation costs, as well as changes in working capital related to inventory, accounts payable and another increaseprepaids. These decreases in cash flow from operating activities were partially offset by lower Merger-related costs and contributions to our defined benefit pension plans during fiscal 2024.plans.
Net cash used in investing activities during fiscal 20242025 was $1,891.8$1,679.4 million primarily due to payments for property, equipment and intangibles of $1,927.5$1,833.6 million, partially offset by proceeds from the sale of assets of $31.4$109.5 million, primarily related to real estate. Payments for property, equipment and intangibles included the completion of 12794 remodels, the opening of 11nine new stores and continued investment in our digital and technology platforms.
Net cash used in investing activities during fiscal 20232024 was $1,746.7$1,891.8 million primarily due to payments for property, equipment and intangibles of $2,036.6$1,927.5 million, partially offset by proceeds from the sale of assets of $217.6$31.4 million, which includes $166.1 millionprimarily related to thereal sale of our equity interest in El Rancho during fiscal 2023.estate. Payments for property, equipment and intangibles included the completion of 150127 remodels, the opening of six11 new stores and continued investments in our digital and technology platforms.
Net cash used in financing activities was $684.1 million in fiscal 2024 primarily consisting of the $250.0 million repayment of the asset-based loan facility (as amended, the "ABL Facility"), dividends paid on our Class A common stock, the repurchase of common stock, payments of obligations under finance leases and tax withholding payments on vesting of RSUs, partially offset by $50.0 million of proceeds from the issuance of debt under the ABL Facility.
Net cash used in financing activities was $1,183.4$782.2 million in fiscal 20232025 primarily consisting of the $950.0 million partial repaymentrepurchase of thecommon ABL Facility,stock, dividends paid on our Class A common stock, payments for debt financing costs, payments of obligations under finance leases and tax withholding payments on vesting of RSUs, partially offset by $150.0$4,200.0 million of issuances and subsequent $3,450.0 million of redemptions of senior unsecured notes (as further discussed below under the caption Debt Management). Net proceeds from the issuance of long-term debt underalso includes $425.0 million from the asset-based loan facility (as amended, the "ABL Facility.Facility"), including the $750 million of borrowings related to the ASR Agreement and subsequent repayment using proceeds from the issuance of senior unsecured notes in fiscal 2025.
Net cash used in financing activities was $684.1 million in fiscal 2024 primarily consisting of the $250.0 million repayment of the ABL Facility, dividends paid on our Class A common stock, the repurchase of common stock, payments of obligations under finance leases and tax withholding payments on vesting of RSUs, partially offset by $50.0 million of proceeds from the issuance of debt under the ABL Facility.
Total debt, including both the current and long-term portions of finance lease obligations, net of debt discounts and deferred financing costs, decreasedincreased $248.5$1,126.5 million to $8,946.6 million as of the end of fiscal 2025 compared to $7,820.1 million as of the end of fiscal 2024 compared to $8,068.6 million as of the end of fiscal 2023.2024.
As of February 28, 2026, there was $425.0 million outstanding under the ABL Facility and total availability of $3,562.3 million (net of letter of credit usage). On August 27, 2025, the existing ABL Facility was amended and restated to, among other things, extend the maturity date of the facility to August 27, 2030. The new ABL Facility has an interest rate of term SOFR plus a margin ranging from 1.25% to 1.50% and also provides for a letters of credit sub-facility of $1,500.0 million.
On February 2, 2026, the Company and certain of its subsidiaries (the "Subsidiary Co-Issuers") completed the issuance of $1,200.0 million in aggregate principal amount of 5.625% senior unsecured notes due March 31, 2032 (the "2032 Notes") and $900.0 million in aggregate principal amount of additional 5.750% 2034 Notes, as defined below (the "Additional 2034 Notes" and together with the 2032 Notes, the "New Notes"). The Additional 2034 Notes were issued as "additional securities" under the indenture governing the outstanding 2034 Notes. The Additional 2034 Notes are treated as a single class with the outstanding 2034 Notes for all purposes and have the same terms as those of the outstanding 2034 Notes. The New Notes are guaranteed on a senior unsecured basis by all of our existing and future direct and indirect domestic subsidiaries (other than the Subsidiary Co-Issuers) that are obligors under the ABL Facility. Interest on the 2032 Notes is payable semi-annually in arrears on January 15 and July 15 of each year, with the first payment commencing on July 15, 2026. Proceeds from the New Notes, together with approximately $20.7 million of cash on hand, were used to (i) redeem in full the $1,350.0 million outstanding of our 4.625% senior unsecured notes due January 15, 2027 (the "2027 Notes Refinancing"), (ii) redeem in full the $750.0 million outstanding of our 5.875% senior unsecured notes due February 15, 2028 (the "2028 Notes Refinancing" and together with the 2027 Notes Refinancing, the “Refinancing”); and (iii) pay fees and expenses related to the Refinancing and the issuance of the New Notes.
During fiscal 2024, we repaid $200.0 million, net, of the ABL Facility. As of February 22, 2025, we had no borrowings outstanding under the ABL Facility and total availability of $3,972.6 million (net of letter of credit usage).
On MarchNovember 11,10, 2025, subsequentthe toCompany and the endSubsidiary of fiscal 2024, weCo-Issuers completed the issuance of $600.0$700.0 million in aggregate principal amount of 6.250%5.500% senior unsecured notes due March 15,31, 20332031 (the "20332031 Notes") and $800.0 million in aggregate principal amount of 5.750% senior unsecured notes due March 31, 2034 (the "2034 Notes" and together with the 2031 Notes, the "Notes"). The Notes are guaranteed on a senior unsecured basis by all of our existing and future direct and indirect domestic subsidiaries (other than the Subsidiary Co-Issuers) that are obligors under the ABL Facility. Interest on the 2033 Notes is payable semi-annually in arrears on MarchMay 15 and SeptemberNovember 15 of each year, with the first payment commencing on SeptemberMay 15, 2025.2026. OnDuring March 17,fiscal 2025, subsequent to the end of fiscal 2024, proceeds from the 2033 Notes, together with approximately $5.6 million of cash on hand,Notes were used to (i) redeem in full the $600.0$750.0 million outstanding of our 7.500%3.250% senior unsecured notes due March 15, 2026 (the "November Refinancing"); (ii) repay a portion of the borrowings under the ABL Facility; and (iiiii) pay fees and expenses related to the November Refinancing and the issuance of the 2033 Notes.
On March 11, 2025, the Company and the Subsidiary Co-Issuers completed the issuance of $600.0 million in aggregate principal amount of 6.250% senior unsecured notes due March 15, 2033 (the "2033 Notes"). The 2033 Notes are guaranteed on a senior unsecured basis by all of our existing and future direct and indirect domestic subsidiaries (other than the Subsidiary Co-Issuers) that are obligors under the ABL Facility. Interest on the 2033 Notes is payable semi-annually in arrears on March 15 and September 15 of each year, and the first payment commenced on September 15, 2025. Proceeds from the 2033 Notes, together with approximately $5.7 million of cash on hand, were used to (i) redeem in full the $600.0 million outstanding of our 7.500% senior unsecured notes due March 15, 2026 (the "March Refinancing") and (ii) pay fees and expenses related to the March Refinancing and the issuance of the 2033 Notes.
We have established a dividend policy pursuant to which we intend to pay a quarterly dividend on our Class A common stock. Cash dividends paid on our Class A common stock were $322.7 million ($0.60 per common share), $295.1 million ($0.51 per common share), $276.2 million ($0.48 per common share) and $255.1$276.2 million ($0.48 per common share) during fiscal 2024,2025, fiscal 20232024 and fiscal 2022,2023, respectively. On DecemberApril 11,14, 2024,2026 subsequent to the end of fiscal 2025, we announced that the Board of Directors (the "Board") increased the quarterly cash dividend 25%13% from $0.12$0.15 per common share to $0.15$0.17 per common share. OnAlso on April 15,14, 2025,2026, we announced the next quarterly dividend payment of $0.15$0.17 per share of Class A common stock to be paid on May 9,8, 20252026 to stockholders of record as of the close of business on April 25,24, 2025.2026.
During the first quarter of fiscal 2023, the conversion of the remaining Convertible Preferred Stock was completed. The holders of Convertible Preferred Stock were entitled to a quarterly dividend at a rate per annum of 6.75% of the liquidation preference per share of the Convertible Preferred Stock. In addition, the holders of Convertible Preferred Stock participated in cash dividends that we pay on our common stock to the extent that such cash dividends exceed $206.25 million per fiscal year and shares of Convertible Preferred Stock remain outstanding as of the applicable record date to participate in such dividends. Cash dividends paid to holders of the Convertible Preferred Stock were $0.8 million and $65.3 million during fiscal 2023 and fiscal 2022, respectively.
On October 13, 2022, we declared the Special Dividend, payable to stockholders of record, including holders of Series A preferred stock on an as-converted basis, as of the close of business on October 24, 2022. On January 20, 2023, the Special Dividend of $3,916.9 million was paid.
On October 14, 2025, the Board authorized an increase to the share repurchase program from $2.0 billion to $2.75 billion of our common stock. The share repurchase program could include open market repurchases, accelerated share repurchase programs, tender offers, block trades, potential privately negotiated transactions, or trading plans in compliance with the federal securities laws. Also on October 14, 2025, we entered into an accelerated share repurchase agreement (the "ASR Agreement") with JPMorgan Chase Bank, National Association ("JPMorgan") to repurchase $750 million of shares of our common stock. The ASR Agreement was funded with $750.0 million of borrowings under the ABL Facility. Pursuant to the ASR Agreement, on October 15, 2025, we paid JPMorgan $750.0 million in cash and received an initial delivery of 35.4 million shares of common stock with a value equal to $600.0 million as of the date the ASR Agreement was executed, representing an estimated 80% of the total shares initially underlying the ASR Agreement. Final settlement of the ASR Agreement occurred during the fourth quarter of fiscal 2025, and the Company received a final delivery of 7.3 million shares on January 8, 2026. The Company repurchased a total of 42.7 million shares under the ASR Agreement at an average price of $17.57 per share, based on the average of the volume-weighted average share price of the Company's common stock on specified dates during the term of the ASR Agreement, less a discount.
During fiscal 2025 and fiscal 2024, we repurchased an aggregate of 78.7 million shares and 4.1 million shares of our common stock for a total of $1,492.5 million and $82.5 million, respectively. We did not repurchase any shares of our common stock during fiscal 2023. On April 14, 2026, the Board authorized an increase to the remaining share repurchase authorization of $900 million, resulting in a total remaining authorization of $2.0 billion as of April 14, 2026.
On December 11, 2024, the Board authorized a share repurchase program of up to $2.0 billion of our common stock. The share repurchase program could include open market repurchases, accelerated share repurchase programs, tender offers, block trades, potential privately negotiated transactions, or trading plans in compliance with the federal securities laws. Subsequent to the Board authorization, during the fourth quarter of fiscal 2024, we repurchased an aggregate of 4.1 million shares of our common stock for a total of $82.5 million pursuant to such share repurchase authorization. We did not repurchase any shares of our common stock during fiscal 2023 and fiscal 2022.
Based on current operating trends, we believe that we have significant sources of cash to meet our liquidity needs for the next 12 months and for the foreseeable future, including cash on hand, cash flows from operating activities and other sources of liquidity, including the ABL Facility. We estimate our liquidity needs over the next 12 months to be approximatelyin $5.5the billion,range of $6.0 billion to $6.5 billion. This includes $425.0 million related to the outstanding borrowings under our ABL Facility for which includeswe may, at our discretion, elect to pay all or a portion of the outstanding balance within the next 12 months, and anticipated requirements for incremental working capital, capital expenditures, pension obligations, interest payments,payments and scheduled principal payments of debt, operating leases, finance leases, legal settlements, quarterly dividends on Class A common stock,stock and common stock repurchases, operating leases and finance leases.repurchases. In addition, we may enter into refinancing and sale leaseback transactions from time to time. We believe we have adequate cash flow to continue to maintain our current debt ratings and to respond effectively to competitive conditions.
(5) Consists of self-insurance liabilities, which have not been reduced by insurance-related receivables, as well as payment obligations related to withdrawal liabilities. The table also includes expected cash outflows related to the CombinedOpioid Plan.Settlement Framework estimated liability. The table excludes the unfunded pension and postretirement benefit obligation of $170.3$98.8 million. The potential settlement payments related to unrecognized tax benefits have been excluded from the contractual obligations table because a reasonably reliable estimate of the timing of future tax settlements cannot be determined. Also excludes deferred tax liabilities and certain other deferred liabilities that will not be settled in cash.
We currently contribute to 2728 multiemployer pension plans whichfor providea retirementsubstantial benefitsmajority of employees represented by unions pursuant to participantscollective basedbargaining onagreements theirthat servicerequire us to contributingcontribute employers.to these plans. The benefits are paid from assets held in trust for that purpose and the respective plan trustees are responsible for determining the level of benefits to be provided to participants, the management of the plan assets and plan administration. We continue to monitor any potential exposure to underfunded multiemployer plans for our associates who are beneficiaries of these plans.
Based on an assessment of the most recent information available, we believe that a majority of the multiemployer plans to which we contribute are underfunded, which is the amount by which the actuarial determined plan liabilities exceed the value of the plan assets. We are only one of many employers that contribute to these plans, and we are neither obligated to fund nor act as a guarantor of any plan's underfunded status. Accordingly, the underfunding of these plans does not represent a liability of the Company.
What changed in the latest 10-Q
Risk Factors
There have been no material changes to the risk factors previously included in our Annual Report on Form 10-K for the fiscal year ended February 28, 2026, filed with the SEC on April 27, 2026, under the heading "Risk Factors".
No wording changes found in this section (only numbers or dates changed in 1 paragraph).
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Comparison of the First Quarter of Fiscal 2026 to the First Quarter of Fiscal 2025.”
Removed heading “Comparison of the Third Quarter of Fiscal 2025 and the First 40 weeks of Fiscal 2025 to the Third Quarter of Fiscal 2024 and the First 40 weeks of Fiscal 2024.”
Largest changes
“•litigation in connection with the previously pending merger and the termination of the merger agreement, resulting in ongoing costs that we may be required to pay in connection with the lawsuit against Kroger, or our inability to collect the $600 million termination fee from Kroger, and negative reactions from the financial markets and our suppliers, customers, and associates as a result of the litigation;”see in full comparison
Selling and administrative expensessee in full comparisondecreasedincreased to25.3%25.6% of Net sales and other revenue during the first40 weeksquarter of fiscal20252026 compared to25.6%25.4% of Net sales and other revenue for the first40 weeksquarter of fiscal2024.2025. Excluding the impact of fuel, Selling and administrative expenses as a percentage of Net sales and other revenuedecreasedincreased5042 basis points during the first quarter of fiscal 2026 compared to the first40 weeksquarter of fiscal2024.2025. Thisdecreaseincrease in Selling and administrative expenses as a percentage of Net sales and other revenue was primarily attributable tolowerincreasesMerger-relatedin rent and occupancy costs, merger-related litigation costs, business transformation costs andthedepreciationsalesandleveraging of employee costs,amortization, partially offset byanaincreasedecrease inbusiness transformationemployee costs.TheDespitebenefits from ourdisciplined productivityinitiatives continue to partially offset increasing wage ratesandothercostinflationarymanagementpressuresinitiatives, the rate was negatively impacted by lower identical sales, including the effect of the IRA onourpharmacyoperatingsalesexpenses.growth.
“Comparison of the Third Quarter of Fiscal 2025 and the First 40 weeks of Fiscal 2025 to the Third Quarter of Fiscal 2024 and the First 40 weeks of Fiscal 2024.”see in full comparison
“Technology remains central to our long-term growth strategy, and this technology-first approach is enabling us to innovate faster, operate more efficiently and deliver greater value at lower cost. Our modern, cloud-native platform continues to power key operations across eCommerce, stores, pharmacy, supply chain, merchandising and Media Collective operations, and is positioning us to rapidly scale AI to enhance our core business functions and unlock new levels of speed, intelligence and personalization. …”see in full comparison
“Technology and artificial intelligence capabilities continue to be advanced across multiple areas of the business. Following the ACI Edge operating structure realignment, we expect to deploy technology-enabled tools and operating practices more consistently across the enterprise. During the quarter, we continued to enhance customer-facing digital capabilities by building AI-powered experiences that we believe will improve engagement, increase basket size, and create a more seamless shopping journey. …”see in full comparison
“Comparison of the First Quarter of Fiscal 2026 to the First Quarter of Fiscal 2025.”see in full comparison
Full comparison: every changed paragraph (67)
•changes in consumer behavior and spending patterns including those resulting from macroeconomic conditions,conditions includingsuch as inflation and shifts in state and federal assistance programs;
•uncertainty regarding the geopolitical environment including armed hostilities, acts of war and disruption in the distribution of goods;
•our inabilityability to execute on our standalone business and value-creating strategiesstrategies, following the termination of the merger agreement with Kroger due to prolonged uncertainties and restrictions onincluding our businessoperating duringstructure the pendency of the mergerrealignment;
•litigation in connection with the previously pending merger and the termination of the merger agreement, resulting in ongoing costs that we may be required to pay in connection with the lawsuit against Kroger, or our inability to collect the $600 million termination fee from Kroger, and negative reactions from the financial markets and our suppliers, customers, and associates as a result of the litigation;
•our ability to recruitattract and retain qualified or specialized associates who are critical to the success of our Customers for Lifebusiness strategy;
THIRDFIRST QUARTER OF FISCAL 20252026 OVERVIEW
We are one of the largest food retailers in the United States, with 2,2432,240 stores across 35 states and the District of Columbia as of NovemberJune 29,20, 2025.2026. We operate 22 well known banners including Albertsons, Safeway, Vons, Pavilions, Randalls, Tom Thumb, Carrs, Jewel-Osco, ACME, Shaw's, Star Market, United Supermarkets, Market Street, Haggen, Kings Food Markets and Balducci's Food Lovers Market, with approximately 280,000275,000 talented and dedicated employees, as of NovemberJune 29,20, 2025,2026, who serve on average 36.436.5 million customers each week. Additionally, as of NovemberJune 29,20, 2025,2026, we operated 1,708 pharmacies, 1,2411,238 in-store branded coffee shops, 404408 associated fuel centers, 22 dedicated distribution centers, 19 manufacturing facilities and various digital platforms.
During the thirdfirst quarter of fiscal 2025,2026, we continued to execute onour business strategy, including investments in our Customers for Life strategy, which is centered around driving customer growthdigital and engagementloyalty throughplatforms, digitalmedia connection, expanding our Media Collective, enhancing thebusiness, customer value proposition, modernizingtechnology capabilities through technologycapabilities, and drivingproductivity transformationalinitiatives. productivity. We continue to invest inOur growth throughinitiatives ourremain fourfocused on eCommerce, loyalty, pharmacy and health offerings, and digital platformstools ofthat eCommerce,support Loyalty,both Pharmacy & Healthonline and thein-store usecustomer of our mobile app in our stores. This integrated ecosystem is accelerating our ability to innovate, optimize marketing spend, and unlock new revenue streams.experiences.
On July 23, 2026, we announced ACI Edge, an operating structure realignment intended to simplify operations, increase accountability, and more effectively leverage enterprise scale. As part of the realignment, we consolidated our 11 divisions into four regions and centralized center-store merchandising under a single enterprise team. The new structure aligns category management, supplier management, and merchandising functions across the enterprise and is intended to improve consistency and execution across banners and regions.
Identical sales, excluding fuel, decreased 0.8% during the first quarter of fiscal 2026. Digital sales, including Drive Up & Go curbside pickup and home delivery, increased 13% compared to the first quarter of fiscal 2025. Flash delivery continued to be the fastest-growing component of our digital offering during the quarter, and we continued to build our digital capabilities, personalization tools, and fulfillment operations. Our media business also grew during the quarter, driven primarily by increased monetization of existing and new advertising placements. During the quarter, we expanded our advertising offerings through the introduction of branded entertainment solutions for advertising partners.
We continue to invest in our customer value proposition through a combination of pricing, Own Brands offerings, personalized promotions, digital capabilities, and improving the customer experience. In response to a more pressured unit environment and increasingly value-conscious consumers, we are accelerating execution and making targeted investments in our customer value proposition. These investments are intended to improve customer engagement, traffic and unit trends, and strengthen customer loyalty over time.
Technology and artificial intelligence capabilities continue to be advanced across multiple areas of the business. Following the ACI Edge operating structure realignment, we expect to deploy technology-enabled tools and operating practices more consistently across the enterprise. During the quarter, we continued to enhance customer-facing digital capabilities by building AI-powered experiences that we believe will improve engagement, increase basket size, and create a more seamless shopping journey. Within supply chain operations, we are expanding the use of advanced analytics and machine learning to support forecasting, inventory management, and replenishment processes.
Identical sales, excluding fuel, increased 2.4% during the third quarter of fiscal 2025. Our digital investments are driving engagement, customer acquisition and retention. During the third quarter of fiscal 2025, digital sales, which include Drive Up & Go curbside pickup and home delivery, increased 21% compared to the third quarter of fiscal 2024. In loyalty, membership grew 12% to 49.8 million in the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024, while program enhancements and simplification continue to fuel deeper engagement. Most recently, we again extended the value of our loyalty platform beyond grocery with the launch of a new offering with Uber One, offering members exclusive benefits and savings.
In our customer value proposition, we continued to invest in value through loyalty enhancements, personalized promotions, and selective price investments in key categories. These actions, in addition to partnering with vendors and Own Brands innovation, are driving engagement and value creation. We also continue to carefully manage cost inflation to help stretch customers' wallets.
Technology remains central to our long-term growth strategy, and this technology-first approach is enabling us to innovate faster, operate more efficiently and deliver greater value at lower cost. Our modern, cloud-native platform continues to power key operations across eCommerce, stores, pharmacy, supply chain, merchandising and Media Collective operations, and is positioning us to rapidly scale AI to enhance our core business functions and unlock new levels of speed, intelligence and personalization. In our integrated mobile app, AskAI delivers a conversational search experience for cross-category discovery and personalized recommendations, and we recently launched innovations like autonomous shopping assistants.
Our capital allocation strategy balances investing for the future, strengthening our balance sheet and returns to shareholders through a combination of dividends and opportunistic share repurchases. Capital expenditures were approximately $1,413$522 million for the first 40 weeksquarter of fiscal 2025,2026, primarily including the completion of 7415 remodels, the opening of fivefour new stores and continued investment in our digital and technology platforms. On April 14, 2026, we increased the quarterly cash dividend from $0.15 per common share to $0.17 per common share. Also on April 14, 2026, we increased the remaining share repurchase authorization to $2.0 billion in total. Capital returns to shareholders during the first 40 weeksquarter of fiscal 20252026 included $246.7$84.0 million of common stock dividends ($0.45$0.17 per common share) and the investmentrepurchase of $1,361.613.4 million for the repurchaseshares of common stock,stock inclusivefor a total of the$226.5 $750.0 million ASR Agreement.million.
ThirdFirst quarter of fiscal 20252026 highlights
In summary, our financial and operating highlights for the thirdfirst quarter of fiscal 20252026 include:
•Identical sales increaseddecreased 2.4%0.8%
•Loyalty members increased 12% to 49.8 million
The following table shows stores operating, acquired, opened and closed during the periods presented:
Comparison of the First Quarter of Fiscal 2026 to the First Quarter of Fiscal 2025.
Comparison of the Third Quarter of Fiscal 2025 and the First 40 weeks of Fiscal 2025 to the Third Quarter of Fiscal 2024 and the First 40 weeks of Fiscal 2024.
The following tables and related discussion set forth certain information and comparisons regarding the components of our Condensed Consolidated Statements of Operations for the 12 and 4016 weeks ended NovemberJune 29,20, 2026 ("first quarter of fiscal 2026") and 16 weeks ended June 14, 2025 ("thirdfirst quarter of fiscal 2025" and "first 40 weeks of fiscal 2025") and 12 and 40 weeks ended November 30, 2024 ("third quarter of fiscal 2024" and "first 40 weeks of fiscal 2024") (dollars in millions, except per share data).
Net sales and other revenue increased 1.9% to $19,123.7 million for the third quarter of fiscal 2025 from $18,774.5 million for the third quarter of fiscal 2024. The increase in Net sales and other revenue was primarily driven by a 2.4% increase in identical sales, with strong growth in pharmacy sales being the primary driver of the identical sales increase. We also continued to grow our digital sales during the third quarter of fiscal 2025. These increases in Net sales and other revenue were partially offset by a net reduction in sales driven by store closures since the third quarter of fiscal 2024 and lower fuel sales.
Net sales and other revenue increased 2.2%0.2% to $62,920.3$24,941.6 million for the first 40 weeksquarter of fiscal 20252026 from $61,591.4$24,880.8 million for the first 40 weeksquarter of fiscal 2024.2025. The increase in Net sales and other revenue was primarily driven by ahigher 2.5%fuel increasesales, inwhile identical sales,sales declined 0.8%. Pharmacy and digital remained areas of strength, with strong growth in pharmacy sales being the primary driver of the identical sales increase. We also continuedcontinuing to grow ourdespite ongoing Inflation Reduction Act ("IRA") headwinds and digital sales increasing 13% during the first 40 weeksquarter of fiscal 2025. These increases in Net sales and other revenue were partially offset by lower fuel sales.2026.
Identical sales include stores operating during the same period in both the current year and the prior year, comparing sales on a daily basis. Direct to consumer digital sales are included in identical sales, and fuel sales are excluded from identical sales. Acquired stores become identical on the one-year anniversary date of the acquisition. Identical sales for the 12 and 4016 weeks ended NovemberJune 29,20, 20252026 and the 12 and 4016 weeks ended NovemberJune 30,14, 2024,2025, respectively, were:
(4) Consists primarily of wholesale revenuesales to third parties, commissions, rental income, media advertising revenue and other miscellaneous revenue.
Gross margin rate decreased to 27.4% during the third quarter of fiscal 2025 compared to 27.9% during the third quarter of fiscal 2024. Excluding the impact of fuel and LIFO expense, gross margin rate decreased 55 basis points compared to the third quarter of fiscal 2024. This decrease in gross margin rate was driven by increases in delivery and handling costs related to the continued growth in our digital sales, and strong growth in pharmacy sales, which carries an overall lower gross margin rate. We also continue to make incremental investments in our customer value proposition which were funded by the benefits from our productivity initiatives.
Gross margin rate decreased to 27.2%26.6% during the first 40 weeksquarter of fiscal 20252026 compared to 27.8%27.1% during the first 40 weeksquarter of fiscal 2024.2025. Excluding the impact of fuel and LIFO expense, gross margin rate decreased 6923 basis points compared to the first 40 weeksquarter of fiscal 2024.2025. This decrease inwas gross margin rate wasprimarily driven by strong growth in pharmacy sales, which carries an overall lower gross margin rate, and increases in delivery and handling costs related to the continued growth in our digital sales.sales, Weas well as higher fuel costs. These impacts were partially offset by improvements in pharmacy margins, primarily related to the impact of the IRA. The Company also continuecontinued to make incremental investments in ourits customer value proposition which wereproposition, funded by the benefits from our productivity initiatives.
Selling and administrative expenses decreased to 24.9% of Net sales and other revenue during the third quarter of fiscal 2025 compared to 25.1% during the third quarter of fiscal 2024. Excluding the impact of fuel, Selling and administrative expenses as a percentage of Net sales and other revenue decreased 33 basis points compared to the third quarter of fiscal 2024. This decrease in Selling and administrative expenses as a percentage of Net sales and other revenue was primarily attributable to the sales leveraging of employee costs and lower merger-related costs, partially offset by an increase in business transformation costs. The benefits from our productivity initiatives continue to partially offset increasing wage rates and other inflationary pressures on our operating expenses.
Selling and administrative expenses decreasedincreased to 25.3%25.6% of Net sales and other revenue during the first 40 weeksquarter of fiscal 20252026 compared to 25.6%25.4% of Net sales and other revenue for the first 40 weeksquarter of fiscal 2024.2025. Excluding the impact of fuel, Selling and administrative expenses as a percentage of Net sales and other revenue decreasedincreased 5042 basis points during the first quarter of fiscal 2026 compared to the first 40 weeksquarter of fiscal 2024.2025. This decreaseincrease in Selling and administrative expenses as a percentage of Net sales and other revenue was primarily attributable to lowerincreases Merger-relatedin rent and occupancy costs, merger-related litigation costs, business transformation costs and thedepreciation salesand leveraging of employee costs,amortization, partially offset by ana increasedecrease in business transformationemployee costs. TheDespite benefits from ourdisciplined productivity initiatives continue to partially offset increasing wage rates and othercost inflationarymanagement pressuresinitiatives, the rate was negatively impacted by lower identical sales, including the effect of the IRA on ourpharmacy operatingsales expenses.growth.
(Gain) Loss on Property Dispositions and Impairment Losses, Net
For the thirdfirst quarter of fiscal 2026, net gain on property dispositions and impairment losses was $4.7 million, primarily driven by net gains from the sale of real estate assets. For the first quarter of fiscal 2025, net gain on property dispositions and impairment losses was $1.2$31.9 million, primarily driven by $1.3$45.5 million of net gains primarily from the sale of real estate assets.assets, Forpartially offset by $11.4 million from the thirdimpairment quarterand disposal of fiscalcertain 2024,technology net loss on property dispositionsassets and impairment losses was $10.2 million, primarily driven by $6.0$2.2 million of retail store impairment losses and $4.2 million of net losses from the sale of real estate assets and equipment disposals.losses.
For the first 40 weeks of fiscal 2025, net gain on property dispositions and impairment losses was $28.7 million, primarily driven by $48.8 million of net gains primarily from the sale of real estate assets, partially offset by $11.7 million from the impairment and disposal of certain technology assets and $8.4 million of retail store impairment losses. For the first 40 weeks of fiscal 2024, net loss on property dispositions and impairment losses was $59.4 million, primarily driven by $62.7 million of asset impairments including impairment losses of $39.8 million primarily related to equipment from the closing of our micro-fulfillment centers, $19.5 million of retail store impairment losses and $3.5 million related to certain technology assets, partially offset by $3.3 million of net gains from the sale of real estate assets.
Interest expense, net was $116.0 million during the third quarter of fiscal 2025 compared to $109.0 million during the third quarter of fiscal 2024. The increase in Interest expense, net was primarily attributable to higher average outstanding borrowings. The weighted average interest rate during the third quarter of fiscal 2025 was 5.5%, excluding amortization and write-off of deferred financing costs and original issue discount, compared to 5.6% during the third quarter of fiscal 2024.
Interest expense, net was $363.1$166.7 million during the first 40 weeksquarter of fiscal 20252026 compared to $358.3$141.8 million during the first 40 weeksquarter of fiscal 2024.2025. The increase in Interestinterest expense, net was primarily attributable to higher average outstanding borrowings. The weighted average interest rate during the first 40 weeks of fiscal 2025 was 5.5%, excluding amortization and write-off of deferred financing costs and original issue discount, compared to 5.6% during the first 40 weeks of fiscal 2024.
Other (Income) Expense,Income, Net
For the thirdfirst quarter of fiscal 2025,2026, other income, net was $4.0$16.8 million compared to $5.6other income, net of $3.9 million for the thirdfirst quarter of fiscal 2024.2025. Other income, net during the thirdfirst quarter of fiscal 2026 was primarily driven by realized gains from non-operating investments and non-service cost components of net pension and post-retirement income, partially offset by unrealized losses from non-operating investments. Other income, net during the first quarter of fiscal 2025 was primarily driven by non-service cost components of net pension and post-retirement income and realized gains from non-operating investments,income, partially offset by unrealized losses from non-operating investments. Other income, net during the third quarter of fiscal 2024 was primarily driven by unrealized gains from non-operating investments and non-service cost components of net pension and post-retirement expense.
For the first 40 weeks of fiscal 2025, other income, net was $37.6 million compared to other expense, net of $0.3 million for the first 40 weeks of fiscal 2024. Other income, net during the first 40 weeks of fiscal 2025 was primarily driven by non-service cost components of net pension and post-retirement income, including $26.8 million of pension settlement income, and realized gains from non-operating investments, partially offset by unrealized losses from non-operating investments. Other expense, net during the first 40 weeks of fiscal 2024 was primarily driven by non-service cost components of net pension and post-retirement expense and unrealized gains and losses from non-operating investments.
Income tax expense was $84.4$29.0 million during the thirdfirst quarter of fiscal 2025,2026, representing a 22.3%25.5% effective tax rate. Income tax expense was $14.5$75.0 million during the thirdfirst quarter of fiscal 2024,2025, representing a 3.5%24.1% effective tax rate. The increase in the effective income tax rate was primarily driven by the recognitionlegislative expiration of $81.0federal million of discrete state incomeemployment tax benefits related to the settlement of audits during the third quarter of fiscal 2024.credits.
Income tax expense was $210.6 million during the first 40 weeks of fiscal 2025, representing a 23.2% effective tax rate. Income tax expense was $124.7 million during the first 40 weeks of fiscal 2024, representing a 13.7% effective tax rate. The increase in the effective income tax rate was primarily driven by the recognition of $81.0 million of discrete state income tax benefits related to the settlement of audits during the third quarter of fiscal 2024.
Net income was $84.7 million, or $0.17 per Class A common share, during the first quarter of fiscal 2026 compared to $236.4 million, or $0.41 per Class A common share, during the first quarter of fiscal 2025. Adjusted net income was $210.3 million, or $0.42 per Class A common share, during the first quarter of fiscal 2026 compared to $318.9 million, or $0.55 per Class A common share, during the first quarter of fiscal 2025.
Net income was $293.3 million, or $0.55 per Class A common share, during the third quarter of fiscal 2025 compared to $400.6 million, or $0.69 per Class A common share, during the third quarter of fiscal 2024. The third quarter of fiscal 2024 included the $81.0 million or $0.14 per share benefit related to certain discrete state income tax benefits related to the settlement of audits. Adjusted net income was $390.3 million, or $0.72 per Class A common share, during the third quarter of fiscal 2025 compared to $420.3 million, or $0.71 per Class A common share, during the third quarter of fiscal 2024.
Net income was $698.2 million, or $1.25 per Class A common share, during the first 40 weeks of fiscal 2025 compared to $786.8 million, or $1.35 per Class A common share, during the first 40 weeks of fiscal 2024. The first 40 weeks of fiscal 2024 included the $81.0 million or $0.14 per share benefit related to certain discrete state income tax benefits related to the settlement of audits. Adjusted net income was $957.6 million, or $1.69 per Class A common share, during the first 40 weeks of fiscal 2025 compared to $1,112.9 million, or $1.88 per Class A common share, during the first 40 weeks of fiscal 2024.
For the thirdfirst quarter of fiscal 2025,2026, Adjusted EBITDA was $1,038.7$1,013.2 million, or 5.4%4.1% of Net sales and other revenue, compared to $1,065.1$1,111.0 million, or 5.7%4.5% of Net sales and other revenue, for the thirdfirst quarter of fiscal 2024. For the first 40 weeks of fiscal 2025, Adjusted EBITDA was $2,998.1 million, or 4.8% of Net sales and other revenue, compared to $3,149.6 million, or 5.1% of Net sales and other revenue for the first 40 weeks of fiscal 2024.2025.
(1) Primarily includesIncludes costs associatedrelated withto the Company's business transformation, including third-party consulting fees relatedand tocertain our Customers for Life strategyintegration and costs related to employee terminations,termination costs, as follows (see table below):
(2) Primarily includes litigation costs related to the terminated merger. The first quarter of fiscal 2025 also includes retention program expense related to the terminated merger.
(2) The 12 and 40 weeks ended November 29, 2025 primarily relates to litigation costs and retention program expense related to the terminated merger. The 12 and 40 weeks ended November 30, 2024 primarily includes third-party legal and advisor fees and retention program expense related to the Merger.
Net cash provided by operating activities was $1,649.6$728.9 million for the first 40 weeksquarter of fiscal 20252026 compared to $1,922.1$754.4 million for the first 40 weeksquarter of fiscal 2024.2025. The decrease in cash flow from operating activities during the first 40 weeks of fiscal 2025operations compared to the first 40 weeksquarter of fiscal 20242025 was primarily driven by a decrease in Adjusted EBITDA and increases in cash paid for interest, as well as higher merger-related and business transformation costs, partially offset by changes in working capital related to inventory and accounts payable, as well as increases in business transformation costs andlower cash paid for insuranceindirect claims,taxes partiallyduring offsetthe byfirst lowerquarter Merger-relatedof costsfiscal and contributions to our defined benefit pension plans.2026.
Net cash used in investing activities was $1,285.4$507.7 million for the first 40 weeksquarter of fiscal 20252026 compared to $1,416.5$474.1 million for the first 40 weeksquarter of fiscal 2024.2025.
For the first 40 weeksquarter of fiscal 2025,2026, cash used in investing activities consisted primarily of payments for property, equipment and intangibles of $1,412.8$522.1 million and the Hames acquisition of $28.0 million, partially offset by proceeds from the sale of assets of $85.2$25.8 million, primarily related to real estate. Payments for property, equipment and intangibles in the first 40 weeksquarter of fiscal 20252026 included the completion of 7415 remodels, the opening of fivefour new stores and continued investment in our digital and technology platforms. For the first 40 weeks of fiscal 2024, cash used in investing activities consisted primarily of payments for property, equipment and intangibles of $1,446.7 million, partially offset by proceeds from the sale of assets of $24.1 million, primarily related to real estate. Payments for property, equipment and intangibles in the first 40 weeks of fiscal 2024 included the completion of 84 remodels, the opening of nine new stores and continued investment in our digital and technology platforms.
For the first quarter of fiscal 2025, cash used in investing activities consisted primarily of payments for property, equipment and intangibles of $584.6 million, partially offset by proceeds from the sale of assets of $78.2 million, primarily related to real estate. Payments for property, equipment and intangibles in the first quarter of fiscal 2025 included the completion of 36 remodels, the opening of three new stores and continued investment in our digital and technology platforms.
Net cash used in financing activities was $461.2$129.2 million during the first 40 weeksquarter of fiscal 20252026 compared to $492.3net cash used in financing activities of $422.9 million during the first 40 weeksquarter of fiscal 2024.2025.
Net cash used in financing activities during the first quarter of fiscal 2026 consisted primarily of the repurchase of common stock, dividends paid on our Class A common stock, payments on long-term borrowings and tax withholding payments on vesting of RSUs, partially offset by $275.0 million of proceeds from the issuance of long-term debt under the ABL Facility.
Net cash used in financing activities during the first quarter of fiscal 2025 consisted primarily of the repurchase of common stock, dividends paid on our Class A common stock and tax withholding payments on vesting of RSUs, partially offset by $25.0 million of proceeds from the ABL Facility. Proceeds from the issuance of long-term debt and payments on long-term borrowings also included a $600 million issuance and subsequent $600 million redemption of senior unsecured notes.
Net cash used in financing activities during the first 40 weeks of fiscal 2025 consisted primarily of the repurchase of common stock, dividends paid on our Class A common stock, payments for debt financing costs, payments of obligations under finance leases and tax withholding payments on vesting of RSUs, partially offset by $2,100.0 million of issuances and subsequent $1,350.0 million of redemptions of senior unsecured notes (as further discussed below under the caption Debt Management). Proceeds from the issuance of long-term debt also includes $485.0 million of net proceeds from the ABL Facility, including the $750.0 million of borrowings related to the ASR Agreement and subsequent repayment using proceeds from the issuance of senior unsecured notes in the third quarter of fiscal 2025. Net cash used in financing activities during the first 40 weeks of fiscal 2024 consisted primarily of the $250.0 million repayment of the ABL Facility, dividends paid on our Class A common stock, payments of obligations under finance leases and tax withholding payments on vesting of RSUs, partially offset by $50.0 million of proceeds from the issuance of long-term debt under the ABL Facility.
As of June 20, 2026, there was $700.0 million outstanding under our ABL Facility and total availability of $3,287.4 million (net of letter of credit usage).
We repaid the remaining $56.5 million in aggregate principal amount outstanding of New Albertsons L.P.'s 7.75% Notes due 2026 on their maturity date, June 15, 2026.
As of November 29, 2025, there was $485.0 million outstanding under our ABL Facility and total availability of $3,504.8 million (net of letter of credit usage). On August 27, 2025, the existing ABL Facility was amended and restated to, among other things, extend the maturity date of the facility to August 27, 2030. The new ABL Facility has an interest rate of term SOFR plus a margin ranging from 1.25% to 1.50% and also provides for a LOC sub-facility of $1,500.0 million.
ACI insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 3 Form 4 filings (3 insiders, 3 trade dates, 218,909 shares, about $2.5M) and open-market sales in 2 filings (2 insiders, 2 trade dates, 90,531 shares, about $1.5M). Net open-market shares: 128,378 (purchases minus sales); net value about $1.0M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-07-31 | Mccollam Sharon |
Open-market purchase | 9,000 | $11.48 | $103.3K |
| 2026-07-28 | Morris Susan |
Open-market purchase | 20,277 | $11.46 | $232.4K |
| 2026-07-28 | Morris Susan |
Open-market purchase | 19,132 | $11.38 | $217.7K |
| 2026-07-27 | Moriarty Thomas M |
Open-market purchase | 170,500 | $11.51 | $2.0M |
| 2026-05-06 | Larson Robert Bruce |
Open-market sale | 8,665 | $16.02 | $138.8K |
| 2026-05-06 | Larson Robert Bruce |
Open-market sale | 19,363 | $16.03 | $310.4K |
| 2026-05-06 | Larson Robert Bruce |
Open-market sale | 16,335 | $16.01 | $261.5K |
| 2026-04-29 | Rainwater Evan |
Open-market sale | 3,990 | $16.51 | $65.9K |
| 2026-04-29 | Rainwater Evan |
Open-market sale | 1,561 | $16.52 | $25.8K |
| 2026-04-29 | Rainwater Evan |
Open-market sale | 303 | $16.53 | $5.0K |
| 2026-04-29 | Rainwater Evan |
Open-market sale | 612 | $16.54 | $10.1K |
| 2026-04-29 | Rainwater Evan |
Open-market sale | 200 | $16.55 | $3.3K |
| 2026-04-29 | Rainwater Evan |
Open-market sale | 6,339 | $16.51 | $104.7K |
| 2026-04-29 | Rainwater Evan |
Open-market sale | 3,711 | $16.50 | $61.2K |
| 2026-04-29 | Rainwater Evan |
Open-market sale | 7,000 | $16.50 | $115.5K |
| 2026-04-29 | Rainwater Evan |
Open-market sale | 211 | $16.49 | $3.5K |
| 2026-04-29 | Rainwater Evan |
Open-market sale | 5,749 | $16.49 | $94.8K |
| 2026-04-29 | Rainwater Evan |
Open-market sale | 1,026 | $16.48 | $16.9K |
| 2026-04-29 | Rainwater Evan |
Open-market sale | 7,730 | $16.48 | $127.4K |
| 2026-04-29 | Rainwater Evan |
Open-market sale | 2,886 | $16.47 | $47.5K |
| 2026-04-29 | Rainwater Evan |
Open-market sale | 3,750 | $16.47 | $61.8K |
| 2026-04-29 | Rainwater Evan |
Open-market sale | 600 | $16.46 | $9.9K |
| 2026-04-29 | Rainwater Evan |
Open-market sale | 500 | $16.52 | $8.3K |
| 2026-04-21 | Morris Susan |
Shares withheld for tax | 18,355 | — | — |
| 2026-04-21 | Morris Susan |
Option exercise | 43,391 | $17.90 | $776.7K |
| 2026-04-21 | Morris Susan |
Shares withheld for tax | 17,531 | — | — |
| 2026-04-21 | Morris Susan |
Option exercise | 31,487 | $17.90 | $563.6K |
| 2026-04-21 | Morris Susan |
Shares withheld for tax | 13,320 | — | — |
| 2026-04-21 | Morris Susan |
Option exercise | 39,263 | $17.90 | $702.8K |
| 2026-04-21 | Dhanda Anuj |
Option exercise | 27,120 | $17.90 | $485.4K |
| 2026-04-21 | Dhanda Anuj |
Shares withheld for tax | 12,950 | — | — |
| 2026-04-21 | Dhanda Anuj |
Option exercise | 19,593 | $17.90 | $350.7K |
| 2026-04-21 | Dhanda Anuj |
Shares withheld for tax | 9,356 | — | — |
| 2026-04-21 | Dhanda Anuj |
Shares withheld for tax | 12,295 | — | — |
| 2026-04-21 | Dhanda Anuj |
Option exercise | 24,540 | $17.90 | $439.3K |
| 2026-04-21 | Mccollam Sharon |
Option exercise | 39,263 | $17.90 | $702.8K |
| 2026-04-21 | Mccollam Sharon |
Shares withheld for tax | 11,692 | — | — |
| 2026-04-21 | Mccollam Sharon |
Option exercise | 31,600 | $17.90 | $565.6K |
| 2026-04-21 | Mccollam Sharon |
Shares withheld for tax | 16,118 | — | — |
| 2026-04-21 | Mccollam Sharon |
Option exercise | 43,562 | $17.90 | $779.8K |
| 2026-04-21 | Mccollam Sharon |
Shares withheld for tax | 15,450 | — | — |
| 2026-04-21 | Rainwater Evan |
Option exercise | 15,039 | $17.90 | $269.2K |
| 2026-04-21 | Rainwater Evan |
Shares withheld for tax | 6,362 | — | — |
| 2026-04-21 | Rainwater Evan |
Shares withheld for tax | 6,077 | — | — |
| 2026-04-21 | Rainwater Evan |
Option exercise | 13,609 | $17.90 | $243.6K |
| 2026-04-21 | Rainwater Evan |
Shares withheld for tax | 4,617 | — | — |
| 2026-04-21 | Rainwater Evan |
Option exercise | 10,913 | $17.90 | $195.3K |
| 2026-04-21 | Withers Michael |
Option exercise | 7,400 | $17.90 | $132.5K |
| 2026-04-21 | Withers Michael |
Option exercise | 5,375 | $17.90 | $96.2K |
| 2026-04-21 | Withers Michael |
Shares withheld for tax | 3,131 | — | — |
| 2026-04-21 | Withers Michael |
Shares withheld for tax | 2,988 | — | — |
| 2026-04-21 | Withers Michael |
Option exercise | 6,692 | $17.90 | $119.8K |
| 2026-04-21 | Withers Michael |
Shares withheld for tax | 2,274 | — | — |
| 2026-04-21 | Moriarty Thomas M |
Option exercise | 30,413 | $17.90 | $544.4K |
| 2026-04-21 | Moriarty Thomas M |
Shares withheld for tax | 12,412 | — | — |
| 2026-04-21 | Moriarty Thomas M |
Option exercise | 27,369 | $17.90 | $489.9K |
| 2026-04-21 | Moriarty Thomas M |
Shares withheld for tax | 9,355 | — | — |
| 2026-04-21 | Moriarty Thomas M |
Option exercise | 21,754 | $17.90 | $389.4K |
| 2026-04-21 | Moriarty Thomas M |
Shares withheld for tax | 13,078 | — | — |
| 2026-04-21 | Larson Michelle |
Option exercise | 40,003 | $17.90 | $716.1K |
Well-known investors holding ACI (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Southeastern Asset Management (Longleaf) | 2026-06-30 | 8,636,262 | $116.8M | 6.09% | Added 16% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 7,320,324 | $97.4M | 0.03% | Added 22% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 6,554,442 | $88.7M | 0.05% | Reduced 46% |
| Millennium Management (Israel Englander) | 2026-06-30 | 6,350,699 | $85.9M | 0.06% | Added 1658% |
| Gotham Asset Management (Joel Greenblatt) | 2026-06-30 | 1,191,159 | $16.1M | 0.04% | Reduced 20% |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 372,317 | $5.0M | 0.01% | New position |
| Bridgewater Associates | 2026-06-30 | 246,309 | $3.3M | 0.01% | Added 111% |
| Two Sigma Investments | 2026-06-30 | 115,987 | $1.6M | 0.0% | Reduced 4% |
| D. E. Shaw & Co. | 2026-06-30 | 31,680 | $428.6K | 0.0% | New position |