Omicron dents Albertsons’ supply-chain recovery

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FILE PHOTO: Customers leave an Albertsons grocery store with their purchases in Burbank

– U.S. grocer Albertsons Cos Inc said on Tuesday the Omicron coronavirus variant had put a dent on the recovery of its supply chain, and expects the issues to remain for a longer duration.

Analysts and Corporate America had previously estimated supply-chain snafus to ease halfway through the year, but a full recovery could now be delayed because of Omicron-related issues, including labor shortages.

“For 2022, we expect supply pressures to likely linger for longer, perhaps until the second half of next year before gradually unwinding,” Deutsche Bank analysts wrote in a note on Tuesday.

Shares of Albertsons declined 8% in morning trade after the company also said it was witnessing cost inflation across its supply base, including in ingredients, packaging, transportation and labor.

Albertsons, which also owns Safeway, Vons and Jewel-Osco chains, cut its capital expenditures forecast for fiscal 2021 by $100 million at midpoint to $1.8 billion to $1.9 billion, citing “supply-related constraints.”

“There are more supply challenges, and we would expect more supply challenges over the next four to six weeks,” Chief Executive Officer Vivek Sankaran said on an earnings call.

Sankaran also said Albertsons had to deal with several product categories being out of stock for a few months.

The company, however, raised its forecast for fiscal 2021 profit after posting better-than-expected sales and earnings for the third quarter. It benefited from administering COVID-19 vaccines at its stores and strong demand for groceries.

(Reporting by Praveen Paramasivam in Bengaluru; Editing by Krishna Chandra Eluri)