Albertsons Companies, Inc. (ACI): Checkout Pressure, Credit Cushion 1Q

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Albertsons Companies, Inc. (ACI): Checkout Pressure, Credit Cushion 1Q

Foundation

July 30, 2026 01:43 PM GMT

Morgan Stanley & Co. LLCMRetail Credit Research | North America Jenna L Giannelli

Credit Analyst

Albertsons Companies, Inc. Jenna.Giannelli@morganstanley.comRoopi Bhangu +1 212 761-4340

Roopi.Bhangu@morganstanley.com +1 212 761-1912

(ACI): Checkout Pressure, Credit

Cushion 1Q Exhibit 1 : Fundamental & Valuation View

Fundamental View Neutral

Bottom line: We initiate on ACI with a neutral fundamental view Valuation View Fair

and see the curve at fair value. Defensive grocery demand and No active trade: Consider 2030s &

Trade Recommendation

ample liquidity offset lower volumes, margin pressure and 2031s ~225bp; 2034 at ~250bp

outlook uncertainty. We would consider buying the 30s/31s near

225bp and ’34s closer to 250bp. Preferred Curve Position 2030/2031

Source: Morgan Stanley Research

Key Takeaways

1Q identical sales fell 0.8% and FY26 guidance now embeds a 0.5-1.5% decline, as

lower-income baskets and units soften, and sees EBITDA declining -8% from

margin pressure and operating deleverage.

Management's ACI Edge initiative offers ~$200mn of annual run-rate benefits,

but most arrives in FY27 and productivity is likely reinvested in value. We see

capital allocation as still shareholder-oriented.

Liquidity near $3.5bn and a manageable maturity ladder support BB+/Ba2 ratings.

However, we think downgrade risk rises if leverage increases a half-turn or more.

We prefer the 30s/31s within the curve given it starts to flatten; however, see

levels closer to ~225bp as more attractive.

The 2034s at ~225bp screen fair versus HY Retail; we would consider adding at

~250bp and view <200bp as rich.

The recent earnings miss served as a catalyst for us to spend more time on