Albertsons Targets $2 Billion in Productivity With ‘Four Big AI Bets’
"We just reset our productivity to $2 billion over the next three years."
Albertsons raised its AI-anchored productivity target from $1.5 billion to $2 billion over the next three years on its Q4 2025 earnings call on April 15, with CEO Susan Morris framing the increase as a direct result of early returns from the grocer's AI deployments.
The announcement marks the first time Albertsons has publicly upgraded the target and signals that its AI programme has moved from investment phase to one generating measurable operational returns.
"We just reset our productivity to $2 billion over the next three years," Morris said on the call. She attributed the confidence behind the upgrade to the performance of what Albertsons calls its four big bets, four AI-driven structural initiatives running across its operations.
"Our four big bets, Digital Customer Experience, Merchandising Intelligence, Labor Optimization, and Supply Chain Optimization are not pilot programs. They're all long-term structural initiatives designed to drive growth and expand margins," Morris described.
Each initiative disclosed measurable progress on the call. In Digital Customer Experience, digital penetration surpassed 10% in Q4 for the first time, with digital sales growing 16% in the quarter on a 40% two-year stack.
In Merchandising Intelligence, Albertsons disclosed for the first time that personalized ad pilots delivered a 90% lift in conversion and click-through rates, with Morris describing this as a clear path to scaled personalization.
In Labor Optimization, generative AI scheduling tools are live across operations, improving forecast accuracy and driving labor efficiency.
In Supply Chain, the company's proprietary AI tool Gateway, which launched nationwide in February 2026, is improving inventory efficiency and replenishment for promotional SKUs, with benefits expected to compound through fiscal 2026.
Morris also confirmed that AI-driven merchandising tools are in active deployment, not in planning. "In merchandising, we're already in flight with tools that help us reimagine price and promo and manage our margin spends very effectively," she said during the Q&A session.
The productivity upgrade is backed by a significant increase in capital allocation. Albertsons guided fiscal 2026 capital expenditure of $2 billion to $2.2 billion, up from $1.84 billion in fiscal 2025. AI-powered technologies were named alongside store remodels as the primary uses of that capital.
President and CFO Sharon McCollam said the bulk of productivity savings would flow through the SG&A line and that working capital improvements tied to the four AI big bets are expected to contribute roughly half of the funding for the company's $600 million in planned share repurchases during fiscal 2026.
The earnings results themselves were mixed. Adjusted EBITDA of $903 million and adjusted EPS of $0.48 both beat expectations, but revenue of $20.3 billion missed the $20.49 billion forecast by 0.93%, driven largely by pharmacy headwinds from the Inflation Reduction Act.
The stock fell 3.03% in premarket trading on the revenue miss. For fiscal 2026, Albertsons guided identical sales growth of 0% to 1%.