Albertsons Reports Drop in Produce Sales and Sharp Decline in Profit

Albertsons shoppers are buying less produce, one of the supermarket chain's traditionally most profitable categories. The Idaho-based company operates more than 2,200 stores nationwide, including 581 stores in California under brands such as Albertsons, Safeway, Vons and Pavilions.

The company's latest annual report shows produce sales have softened. The decline indicates customers may be shifting toward cheaper, longer-lasting staples while household budgets remain tight, according to reporting by The Street. Overall sales increased 3.5 percent in the most recent fiscal year.

Operating income was cut in half after the planned merger with Kroger collapsed, while net income fell to $217.4 million from $958.6 million the year before. The company's long-term debt and other liabilities rose about 8 percent to more than $8 billion.

Albertsons has increasingly relied on its pharmacy business, which accounted for 13.7 percent of total revenue in the period.

Last month the company agreed to a $774 million settlement to resolve opioid-related claims brought against it nationwide. The agreement adds to pressure on the grocery chain as it navigates weaker performance in core grocery categories. The shift away from produce comes as the company depends more heavily on pharmacy sales to support growth.

This leaves the rest of the business exposed to continued softness in traditional supermarket categories. The annual report provides a snapshot of financial performance following the termination of the Kroger transaction. Further details on strategic responses were not included in the filing.