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- Delaney Sawyer via Fortune | FORTUNE
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Meg Whitman Pulls Albertsons Forecasts in Aggressive Turnaround
ReMeg Whitman Pulls Albertsons Forecasts in Aggressive Turnaround
Albertsons withdrew its financial guidance as Executive Chairman Meg Whitman signals a deeper overhaul of the struggling grocery chain, which reported a 0.8% drop in identical sales.
Albertsons has withdrawn its financial forecasts while it conducts a sweeping review of its business, the clearest sign yet that newly appointed Executive Chairman Meg Whitman intends to overhaul the struggling grocery giant more aggressively than initially planned.
The company said net sales slipped to $18.9 billion in its second fiscal quarter, driven by a 0.8% decline in identical sales, a metric that excludes newly opened or closed stores. It was the second consecutive quarterly drop, following shrinking growth in the prior period.
Albertsons operates its namesake stores along with 21 other chains, including Safeway, Vons, Jewel-Osco, Tom Thumb and Randalls. The sprawling portfolio has created complex operations and higher costs, making it harder for the company to compete on price against discounters like Walmart and Kroger or bulk operators such as Sam’s Club and Costco.
CEO Susan Morris announced a plan in July called «ACI Edge» aimed at improving competitiveness by reviewing strategy, cost structure, operations and the company’s portfolio of brands. On Tuesday, Albertsons said it was pulling its financial forecasts until that review is complete, suggesting the turnaround could go deeper than originally envisioned.
«Everything should be on the table,» Whitman told Wall Street analysts on the quarterly conference call. «Dramatic improvement is needed now. Albertsons must move faster to change the trajectory of the business.»
Whitman, a longtime technology executive, joined Albertsons last month. She previously served as CEO of eBay, where she professionalized the management structure of a fast-growing startup, and later as CEO of HP, where she simplified a company damaged by the Autonomy acquisition and oversaw its split into two. She has no grocery experience and little retail experience beyond her eBay tenure, but was brought in for her turnaround record and decisiveness.
Like all grocers, Albertsons has been squeezed by cash-strapped shoppers cutting back on non-essentials amid food inflation and higher gas prices. The current period of inflation has been particularly bruising for Albertsons, whose lower-income customers are trading down to cheaper items and store brands, pinching margins or sending shoppers to rivals.
«The reality right now is that the economy is tough for many of our customers,» Morris said.
Neil Saunders, managing director at GlobalData, called Albertsons’ prices «ridiculously high compared to rivals» and said that would «be partly justifiable if other dimensions—store experience, service, private label and so forth—were above par, but they’re not.» To remedy that, he added, Albertsons would need to «invest in prices»—retail speak for lowering them. That in turn adds pressure to find cost savings.
Whitman’s comments to analysts suggest there will be no sacred cows under her leadership. She hinted that Albertsons could shed some brands through «potential strategic actions.»
Morris became CEO in 2025 after the collapse of the planned $24 billion merger between Albertsons and Kroger was followed by the exit of both companies’ chiefs. Albertsons is currently suing Kroger for $9 billion over the failure of the merger. Morris had been operations chief for seven years.
Before Whitman’s appointment, Morris had already taken steps to make Albertsons more flexible, including reducing the number of operating regions to four from 11 to generate economies of scale and speed up decision making. She also centralized much of Albertsons’ merchandising decisions under one team.
As executive chair rather than simply chair, Whitman’s role is much more hands-on, acting as a close operations and strategic adviser to Morris and helping sharpen strategy, improve execution and act with celerity.
«The company has greater potential than its results have reflected,» Whitman said. «But dramatic improvement is needed now. I believe we will turn the corner.»
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