Grocery Earnings Reveal a New “Affordability Era” Is Reshaping the Competitive Map

The latest round of 2026 grocery industry earnings is revealing a widening divide in the business. It’s also providing some of the clearest evidence yet that the shopping habits created by several years of food inflation are becoming ever more deeply embedded.

Inflation has moderated from its post-pandemic highs, while wage growth has helped restore at least some of the purchasing power consumers lost during the pandemic. But the cumulative increase in grocery prices remains considerable and shoppers appear to have carried many of the habits developed during the inflationary period into today’s more stable environment.

As we’ve seen, shoppers are moving between stores, formats, and entire channels more deliberately now. They are buying private label where the value proposition makes sense, shopping promotions more closely, ordering more groceries online and increasingly dividing purchases among supermarkets, mass merchants, clubs, specialty stores and value-oriented retailers. A survey of the latest, most significant grocery industry earnings suggest those behaviors are for all intents and purposes structural now. 

For retailers, the competitive challenge increasingly centers on winning a larger portion of a household’s food spending rather than assuming one store will capture the entire weekly grocery trip. At the same time, some of the industry’s strongest operators have developed businesses around the grocery transaction that generate revenue from advertising, memberships, marketplaces, customer data or digital services.

That is beginning to separate the industry’s strongest performers from the rest of the field.

Walmart Has the Power of Scale — and Multiple Revenue Streams

Few companies demonstrate the shift better than Walmart.

In its fiscal first quarter ended April 30, Walmart U.S. generated net sales of $117.2 billion, up 4.5%. Comparable sales excluding fuel increased 4.1%, with transactions rising 3% and average ticket increasing 1.1%.

Interestingly, unit demand has fallen somewhat across the industry, but Walmart cited strong unit demand, which contributed to higher inventory levels during the quarter.

Digital growth was considerably faster. Global e-commerce sales increased 26%, led by store-fulfilled pickup and delivery and marketplace. Walmart’s global advertising business grew 37%, including a 36% increase in Walmart U.S. advertising, while membership fee revenue increased 17.4% globally.

The significance extends beyond Walmart’s sheer size.

The company can compete aggressively on grocery prices while earning revenue from advertisers, marketplace sellers, memberships, and fulfillment. Those businesses give Walmart additional economic levers that conventional retailers don’t often possess. Walmart can use scale and revenue generated outside the traditional shelf transaction to reinforce its core value proposition, while its stores simultaneously function as fulfillment centers for a rapidly growing digital business.

The result is a formidable cycle: stores support e-commerce, e-commerce supports membership and advertising, and those higher-growth businesses strengthen the economics of the overall enterprise.

Albertsons Faces the Conventional Grocer’s Dilemma

Albertsons Companies provides a much different picture.

The Boise, Idaho-based retailer, whose ACME Markets, Safeway and Kings Food Markets banners give it a significant presence across the Northeast and Mid-Atlantic, reported first-quarter fiscal 2026 net sales and other revenue of $24.94 billion, up slightly from $24.88 billion a year earlier.

Underlying store performance moved in the opposite direction. Identical sales declined 0.8%, while net income fell to $84.7 million, or $0.17 per share, from $236.4 million, or $0.41 per share, a year earlier. Adjusted net income declined to $210.3 million from $318.9 million, and adjusted earnings fell to $0.42 per share from $0.55. Adjusted EBITDA dropped to $1.013 billion from $1.111 billion.

Yet one important part of the business continued growing: digital sales increased 13%. That contrasting figure captures much of the challenge facing conventional supermarkets.

Mainstream operators must maintain competitive pricing across tens of thousands of frequently purchased products while carrying extensive store networks, labor costs and distribution infrastructure. Shoppers, meanwhile, can divide purchases among multiple retailers and channels with relatively little friction. Broad price cuts can protect traffic but pressure margins. Holding price can protect gross profit but create openings for Walmart, Aldi, Lidl, clubs, and other value-oriented competitors.

Albertsons is responding with price investments, targeted promotions and an effort to simplify its organization and lower costs. Its recently announced ACI Edge operating model consolidates 11 divisions into four regions and centralizes center-store merchandising while preserving local execution in other areas.

The company also lowered its fiscal 2026 outlook. Albertsons now expects identical sales to decline anywhere from 0.5% and 1.5%, compared with its previous forecast of flat to 1% growth. Its adjusted EPS forecast was reduced to $1.75 to $1.85 from $2.22 to $2.32.

Those numbers underscore the pressure on the conventional supermarket model.

The objective is increasingly to extract enough productivity from the organization to reinvest in price, digital capabilities, and the customer experience without sacrificing profitability. That becomes considerably harder when the underlying store base is generating negative identical sales.

Sprouts Shows Both the Power — and Limits — of Differentiation

Sprouts Farmers Market offers another approach to the same consumer environment.

The specialty grocer reported second-quarter net sales of $2.3 billion, up 5% from a year earlier, while diluted earnings increased to $1.37 per share from $1.35. For all of that performance there is an important qualification: comparable-store sales declined 1%.

Sprouts opened seven stores during the quarter and finished the period with 490 locations in 25 states. New-unit growth therefore helped drive overall sales higher even as sales at comparable stores moved backward.

CEO Jack Sinclair explicitly described the operating environment as one involving a “cautious consumer.”

That makes Sprouts particularly interesting.

The retailer has built its proposition around produce, natural and organic foods, health-oriented products, specialty merchandise, and product discovery. Its “foraging” strategy continually brings differentiated products into stores, creating an assortment that is less directly comparable with the conventional supermarket down the road.

That differentiation still has value. But the negative comp demonstrates that specialty grocery is by no means insulated from the affordability pressures affecting the rest of the industry.

Sprouts’ results instead point toward a more nuanced conclusion: differentiation can provide retailers with reasons for customers to visit beyond price, but it cannot eliminate consumer sensitivity to price, frequency, or discretionary spending.

For its part, Sprouts appears to recognize that reality. For the full year, the company now expects comparable-store sales ranging from a decline of 0.5% to growth of 0.5%, even as it projects total net sales growth of 5.5% to 6.5% and plans to add 42 net new stores.

Expansion, rather than strong same-store growth, is therefore playing an important role in this company’s 2026 growth strategy.

Ahold Delhaize: Conventional Grocery Can Still Gain Ground

Ahold Delhaize offers an important counterpoint to Albertsons.

The Netherlands-based parent of Food Lion, Giant Food, The GIANT Company, Hannaford and Stop & Shop reported second-quarter net sales of €23.2 billion, an increase of 1.9% at constant exchange rates. Comparable-store sales excluding gasoline increased 1.2% globally.

Performance differed significantly by geography. Comparable sales increased 1.8% in Europe but just 0.8% in the U.S., where Ahold Delhaize cited lower egg prices, reductions in SNAP benefits and changes in pharmacy pricing among the factors weighing on growth.

Digital provided a considerably stronger growth engine. U.S. online sales increased 14.5%, marking the ninth consecutive quarter of double-digit e-commerce growth.

Those results fit closely with the broader affordability story.

Ahold Delhaize has been investing directly in price across its U.S. banners, including an extensive effort at Stop & Shop to lower everyday prices. Those investments contributed to some pressure on profitability, with underlying operating margin declining 10 basis points to 3.9%. Diluted underlying EPS was €0.63, down 1.4% at constant exchange rates.

The company nevertheless reaffirmed its full-year guidance.

Ahold Delhaize’s results illustrate the balancing act confronting conventional supermarkets in the affordability era. Price investment is increasingly necessary to defend customer traffic and basket share, but retailers must find enough productivity and growth elsewhere in the business to absorb the resulting pressure on margins.

Its rapid digital growth provides one such avenue. Ahold Delhaize is also developing retail media, loyalty and other capabilities that allow its U.S. banners to compete for customers beyond the traditional store transaction.

There is another complication, however, that has little to do with grocery prices.

Ahold Delhaize expects changes associated with the Inflation Reduction Act’s Medicare drug-pricing provisions to create an approximately $450 million negative impact on U.S. sales this year.

That regulatory change makes the company’s modest U.S. comparable-sales growth more difficult to interpret strictly as a measure of grocery demand. It also highlights an increasingly important distinction when evaluating supermarket earnings: for operators with substantial pharmacy businesses, reported sales can be affected by forces that have little connection to what shoppers are putting into their grocery baskets.

Weis Markets Finds Growth — But Not Without Pressure

Weis Markets provides an especially relevant view of the affordability environment in the Mid-Atlantic.

The Sunbury, Pa.-based retailer reported second-quarter revenue of $1.28 billion, up 4.6% from a year earlier. Comparable-store sales excluding fuel increased 2.3% and were up 4.1% on a two-year stacked basis.

Those are healthy sales numbers for a regional conventional supermarket operator.

Profitability moved in the opposite direction.

Second-quarter net income declined 9.6% to $22.86 million from $25.28 million a year earlier, while earnings per share fell to $0.92 from $0.96.

Like Ahold Delhaize, Weis also faced a significant pharmacy headwind related to Medicare drug-pricing provisions under the Inflation Reduction Act. The change reduced pharmacy revenue by approximately $10.7 million during the quarter.

For the first half of the year, however, Weis remained comfortably ahead of 2025. Net income for the 26-week period reached $50.71 million, up 13.1% year over year, with earnings of $2.05 per share.

Weis’ results add another dimension to the affordability story because the company has been explicitly investing in value.

Chairman, President and CEO Jonathan Weis said earlier this year that the retailer was expanding its promotional offering and loyalty marketing while investing in facilities and technology to lower costs and improve the customer experience.

That approach produced positive comparable sales even as quarterly profits declined.

For regional supermarket operators, that trade-off may become increasingly familiar. Maintaining relevance with cost-conscious shoppers requires investment in price, promotions and loyalty, while productivity improvements must absorb as much of that expense as possible.

Weis demonstrates that conventional supermarkets can still produce meaningful sales growth in the affordability era. The challenge is converting those gains into equally strong profit growth while consumers remain highly attentive to value.

Instacart Reveals Where Grocery Economics Are Heading

Instacart provides a different view of the grocery market because it does not depend on returns from a physical store network. Instead, the company provides digital infrastructure connecting shoppers, retailers, and CPG manufacturers.

Its newly reported second-quarter results were strong.

Gross transaction value increased 14% to $10.35 billion, while orders rose 9% to 90.3 million. Total revenue increased 14% to $1.043 billion. Transaction revenue grew 13% to $746 million, but advertising and other revenue grew even faster, increasing 16% to $297 million.

Adjusted EBITDA increased 19% to $313 million, while operating cash flow more than doubled to $493 million. GAAP net income was the notable exception, declining 4% to $111 million.

The composition of those results matters just as much as the growth itself.

Instacart is demonstrating how one grocery transaction can generate multiple layers of economic activity. There is revenue associated with the transaction itself, but also advertising revenue generated by brands trying to reach shoppers at the point of purchase.

The same grocery basket therefore has value to the retailer, the fulfillment platform, and the advertiser. Retailers should keep this in mind as they search for profit pools capable of supporting investments in price and digital convenience. 

The Weekly Grocery Trip Is Becoming a Portfolio

Taken together, these earnings give us the emerging shape of grocery’s new affordability era.

Consumers may have more breathing room than they did at the height of food inflation, but years of higher prices have changed how they allocate their grocery dollars. Shoppers learned to switch stores, embrace private label, compare promotions, and divide purchases among multiple formats. Those behaviors are proving durable even as affordability improves.

The household grocery budget has come to resemble something like a portfolio. Walmart may capture pantry staples, a club the stock-up trip, a conventional supermarket fresh and promotional purchases, and specialty and digital operators the occasions where differentiation or convenience matters most.

That fragmentation helps explain the complex earnings picture. Scale and additional revenue streams give Walmart substantial flexibility. Instacart can monetize grocery transactions without operating stores. Sprouts’ negative comp shows the limits of differentiation, while the varying results at Albertsons, Ahold Delhaize and Weis demonstrate the pressure on conventional supermarkets to balance value investments with profitability.

That is the central challenge of the new affordability era. Consumers are no longer simply reacting to rapidly rising prices. They have developed a more deliberate approach to managing a grocery budget that remains historically expensive.

Affordability has therefore become a permanent competitive discipline. The weekly shop has been broken into pieces, and retailers must give shoppers a reason to award them each piece — through price, convenience, differentiation or value — while finding a way to do so profitably.