Albertsons Companies, Inc. (ACI) delivered a bit of good news and bad news on Wednesday when it reported third-quarter fiscal 2025 results for the 12 weeks ended November 29, 2025. The good: adjusted earnings per share hit 72 cents, topping the 68-cent estimate. The bad: net sales and other revenue climbed 1.9% to $19.123 billion, but that missed the $19.169 billion analysts were expecting.

Here's where things get interesting. The grocery chain is doing well in the areas it wants to grow—digital sales jumped 21%, loyalty membership swelled 12% to 49.8 million members, and identical sales rose 2.4%. But those wins are coming with a price tag, literally. Gross margin rate dropped to 27.4% from 27.9% a year ago, and the company pointed to higher delivery and handling costs from digital growth, plus strong pharmacy sales that carry lower margins overall.

Net income came in at $293.3 million, or 55 cents per share, down from $400.6 million, or 69 cents per share, in the prior year. Adjusted net income fared better at $390.3 million, or 72 cents per share, compared with $420.3 million, or 71 cents per share, last year. Adjusted EBITDA was $1,038.7 million, representing 5.4% of net sales and other revenue, versus $1,065.1 million, or 5.7%, a year earlier.

The quarter had some unusual headwinds. Albertsons estimates that a temporary government shutdown and delayed SNAP funding knocked identical sales down by roughly 10 to 20 basis points. That's the kind of external noise that makes quarterly comparisons messy.

On the expense side, there was some good discipline. Selling and administrative expenses improved to 24.9% of net sales and other revenue from 25.1%, driven by employee cost leverage and lower merger-related costs (remember that failed Kroger deal?), though those gains were partially offset by higher business transformation costs.

The tax line tells its own story. Income tax expense jumped to $84.4 million with a 22.3% effective tax rate, compared with just $14.5 million and a 3.5% rate a year earlier. That comparison looks dramatic, but the prior-year quarter benefited from $81.0 million in one-time state tax audit settlements, making this year's number more reflective of normal business.

The balance sheet shows cash and cash equivalents of $195.1 million as of November 29, 2025, with total debt including finance leases at $9,012.7 million. Net cash from operating activities for the first 40 weeks of fiscal 2025 was $1,649.6 million, down from $1,922.1 million in the same period last year.

What Management Is Saying

"Our investments in technology and AI are fundamentally reshaping how we operate and serve our customers; driving smarter decisions, greater efficiency, and more personalized experiences. Growth in our digital and pharmacy channels, combined with disciplined execution and targeted investments, is strengthening our value proposition and positioning us for success," said Susan Morris, Chief Executive Officer.

The company also declared a fourth-quarter fiscal 2025 cash dividend of 15 cents per share, payable February 6, 2026, to stockholders of record as of January 23, 2026.

The Outlook Gets Cloudy

For fiscal 2025, Albertsons trimmed its identical sales growth outlook to a range of 2.2% to 2.5%, down at the midpoint from the previous 2.2% to 2.75% target. Adjusted EBITDA is expected between $3.825 billion and $3.875 billion.

The company tightened its fiscal 2025 adjusted EPS guidance, lifting the low end to $2.08 from $2.06 while cutting the high end to $2.16 from $2.19. That compares to the Street estimate of $2.14.

Here's the pharmacy problem in plain English: the outlook reflects a 16 to 18 basis point impact for fiscal 2025, or a much sharper 65 to 70 basis point hit for the fourth quarter alone, "related to the Inflation Reduction Act's Medicare Drug Price Negotiation Program which took effect on January 1, 2026, resulting in lower pharmacy sales." Translation: new Medicare pricing rules are cutting into pharmacy revenue right as that business was growing nicely.

Albertsons shares were down 0.64% at $17.00 at the time of publication on Wednesday.