Albertsons Companies, Inc. (ACI) Earnings Call Transcript & Summary

Hi, everyone. I'm Robby Ohmes from BofA Global Research, and we are just very pleased to have Vivek Sankaran with us today, the President and CEO of Albertsons. Albertsons, as you all know, executed incredibly well last year in not an easy environment. They adjusted rapidly with the surge in demand for both groceries and digital. And I'm going to -- we're going to open it up to questions. So please put yourselves in the queue, and I'll be reading those questions through email. But before I go into Q&A with Vivek, I'm going to turn it over to him for some introductory comments.

Robby, thank you so much, and good afternoon, everyone. I'm going to just take a couple of minutes, if you don't mind, Robby, just provide an overview of some of the things I'm excited about from the last year, right? One, it was, as you know, a very difficult year for all of us, but it was a busy year for us. And I'm so proud of the progress that our team has made on so many different facets of the business. And what's amazing is that I think we accelerated our transformation during a very, very difficult time and did many things that we never imagined that we could do in such a compressed time frame. And I also come out of the pandemic with conviction that our strategy is working. We've seen it in our performance on top line growth, market share growth and our flow through. I want to just highlight a few things that I'll pick up -- that I'll point to from the last fiscal year. One is we've added customers. We've added customers and our customers who are with us have engaged with us more broadly. And that's been incredibly satisfying. And in fact, we have managed to keep -- our retention rates keep improving quarter-over-quarter, which is just exciting to us. And I always believe, Robby, that we are a relationship business, not just a transaction business, and this last year has proven that even more for us, okay? We're a stronger company than a year ago on many different fronts. Number one, just about every important capability of the company now is backed by data and some technology, whether it's pricing, ordering, production in store, automation in store, automation in DCs and such. We've made significant investments in digital. Our growth continues to be tremendously strong. But over this time, we've also reimagined and redesigned customer-facing applications. We're going to have new releases coming up in April. We have Drive-Up and Go in 1,400 stores. We're going to get to 1,800 soon. And we are designing for 2-hour delivery in all our markets, so we've accelerated that component. Our loyalty program is getting great traction. And we've worked on reinventing the program as we go into '21 so that it goes beyond just offering value and more of that as we go into the year. We have become a more efficient company. Our productivity program is on track, and the great thing is we know that there is more waves of productivity to be had in our business. As I've always said, we're integrated, not transformed, and that transformation is unleashing productivity. All of this on a foundation which I've always talked about of great locations, a better fresh mix than others, a focus on quality, a wide assortment that allowed people to consolidate trips, good own brands program and the ability to optimize locally, which is a heritage of the company. And our balance sheet is good, right? We've reduced the debt levels, and we have cash to invest in growth opportunities as we go forward. As we look forward, we'll talk about the puts and takes as I can imagine coming at us this next year. But we feel prepared for many scenarios, Robby. And so look forward to the discussion with you.

Terrific. Well, why don't we start with that? I mean, no one can predict, I don't think can predict perfectly 2021 with the comparisons, everything, but maybe I'd love to hear how you see the puts and takes for this year for Albertsons.

Sure. I'll tell you what I judged wrong going into the pandemic. Clearly, there's been a lot of carnage in many sectors, service sectors and such. But I never imagined that we'd be sitting here today with a consumer that is sitting on $1.8 trillion of excess savings with a fiscal stimulus coming in, and a consumer that, by and large, is healthy with money to spend going forward, right? I never imagined that. And then -- I mean, I think if you -- if anything, there's going to be more jobs created, not less. So it's a good consumer environment to be in. On top of that -- so that's one that I think is a positive. The second is working from home. I've always maintained that any of that, that sticks continues to drive in-home consumption. So you put that together, I think one of the things that's really positive for us, a business like ours is the quality of product we offer, the breadth of product we offer for cooking at home. And when a consumer has money and they, over the last year, spent time having better quality food, more seafood, better cuts of meat, drinking better wines, I think it's going to be if they go back at all, it will go back slowly. I think of those as all positive. So from a demand standpoint, Robby, I feel really positive about the environment. The challenges that we don't know, one is how quickly will volume shift back to away from home, right? That's one challenge. A second challenge is wage pressures. I think all of us as a sector, an industry, maybe as a country will feel increasing wage pressure. And the third challenge, which many of you have articulated from a historical standpoint is price-based competition. Will that come or not? I think there are a lot more things that will hold that back, given the demand environment and the consumer environment and the technology in place today, but that's something that is always something for us, all of us to look for and watch out for in the industry. That's how I see it, but I feel really good about the demand side of things.

That's really helpful. A question I get a lot is just, and I won't hold you to the opinion. But just grocery inflation, and it's a tricky dynamic because there would be the cost component that encourages inflation for a retailer like Albertsons and then there would be the promotional environment. If it's stronger, does that mean -- is that an offset to other forces? I mean how does the -- how could the inflationary dynamics for food retailers play out do you think this year?

Yes. I think, one, on the products -- on the commodity side itself, we're seeing about 3.5%-ish at this time, 3.5% -- between 3.5% and 4%. My suspicion is that it will remain that way for the next few months. And maybe in the second half of the year, it gets back to 1% to 2%, which is how we are modeling it. We prefer modeling at the 1% to 2% and managing the P&L. And then if there is inflation, it always helps on that front. Now with -- so that's one part of it. Now even if you see wage inflation, that's the second piece, Robby, you remember, the lot of the costs that we're incurring, such as the quarantine costs and all of that, those start dissipating as we go through the year. So to the extent we see any wage inflation as a sector, I think you'll find the entire sectors starting to offset with these other operating costs that we incurred in substantial amounts last year.

Got you. That's helpful. And how do you think about the promotional environment, as you move through 2021? Do you think there will sort of be a slow return to promotions? Or could it come back fast? And who's the sort of marginal player that kind of makes things promotional or not promotional?

Yes. The current nature of demand versus the supply is acting as a very natural throttle for how much we can promote, right? In several categories, the supply just hasn't come back. And that's one. Second, I think you have a higher demand environment, right? That might be even more demand as we go forward. So that's another one that will hold it back. But what I'm excited about, Robby, is that in our sector, collectively, we're all going more digital. We certainly are going more digital. We have more technology to manage the promotions. So it's not about quantity, but quality of promotions. That's what we're emphasizing. So unlike the past years, I think you're going to find, at least, certainly, we are going to be much more targeted in our promotions, more personalized and focusing on quality, not quantity. A simple way to see that is how many pages is our brochure, right? It's 4 pages, right? So it's not the quantity of promotions. And that's how I see it going forward, right, so that we can clear the market very specifically for certain customers and yet make sure it's a profitable enterprise.

So would this be a change in the sort of high-low approach you normally do? Or how do you see executing pricing strategy overall. Is it just -- is it more individually targeted? Or does it change how you're promoting within the stores locally? Or what kind of changes can we see?

Yes. So Robby, I don't -- it is not a change from a high-low pricing. I think there is a set of customers who selects a company like us who does high-low. So you will continue to see us doing high-low. What I'm talking about is we do a lot of promotions today. When you don't have the ability to harness and analyze large pieces of data, see interactions and so on and so forth, the tendency of the merchant is to redo the promotions and lap it from last year and such, right? And that's typically a lot of money wasted between CPGs and us in the everyday -- in promotions that we do. What I'm talking about is, number one, making sure that we don't waste that money on those promotions, that we actually shifted to things that really matter and make a difference for the customer. And then where we do it is that we are much more targeted. So you may see a deep promotion for an individual on a particular item that's not necessarily in the flyer. So think of it that way. It's not deviating away from high-low, but just being more surgical with high-low.

Vivek, last year around this time, in that March-April time frame, I think what really impressed me about Albertsons was you guys were really quick to adjust. You were very tactical, and it showed up in that big 47% comp that you guys put up March of last year. Nobody knows for sure what's going to happen. But there are different ways the consumer may go, maybe even different ways depending on regions. Do you think you'll be able to move really fast to where the consumer could go next in a sort of new vaccine environment.

Yes. So Robby, I think part of our -- part of the reason we were able to react very quickly is that we have this notion of, we're organized in local markets, and we allow people in the local markets to make decisions because they see things before we see -- I see it in Boise, right? And they always will see things before I see it in Boise. And so we allow them to react quickly and I think to the extent -- my sense is this. See, if you go back to the pandemic, back in March-April last year, you saw some markets peaking up a little sooner than other markets, they just followed the disease. Then it's kind of steadied out, and we saw less differential between the markets, okay? And what we saw was more -- our sales going up and down with the broader sentiment of the country. Now that we are lapping it, I think we'll also see differences in markets. That's my prediction. And the way we're going to tackle it is allow those markets to react as quickly as they're capable of, and they always are, because our distribution is local, our pricing is local, and we can bring the capabilities we need to, such as e-commerce and all that, that we've overlaid on top of it. So we feel really comfortable. We have a meals program that we're rolling out that will take effect at different rates in different markets, but we feel very comfortable that the same management philosophy will help us.

No, that's great. I know it's kind of hard to figure out, but when you look at the strength of your comps through the pandemic, I mean, it looks like you took a lot of market share. Where do you think it came from?

Yes. So when I track market share, I look at -- we look at dollars and units, and we look at food and MULO, okay? And we gained market share consistently on food, and we gained even more market share on MULO, which includes mass and other things. And then -- and the detail varies by market. And as you know, as you get deeper and deeper, more granular in market, the sample size drops and such, but that's the broad story. The reason I believe we have gained market share, it's fundamentally around a bigger mix of fresh, where people, when you eat at home, I mean, if you look at our -- what's interesting, Robby, is when you look at our transactions, our transactions are much higher on fresh, people coming in more often and buying less of fresh and then coming in less often and filling up the whole basket. And so clearly, it was anchored in fresh, but then the ability to complete the whole basket. And then on top of that, the convenience we added with e-commerce, which -- and other plays, where, look, we told you all 1,400 stores and we've done 1,400 stores in DUG and we're going even further. I think it's a combination that helped us gain market share.

That makes a lot of sense. Another big question out there is just COVID costs. And everybody had a lot come on. Do a lot stay? Or could a lot roll off as you move through this year?

Yes. So there's a -- if I break it up into its components. There is the costs that were, what we called, appreciation pay and such when economies were closed, markets were closed, we deeply appreciated what our front-line was doing there. The second bucket of costs is quarantine costs. So one of our colleagues gets COVID, they get to go, we pay them. And then if they have had interactions with 4 or 5 people, we make sure that they go and quarantine themselves too and pay them. So there's that quarantine costs. And the third bucket is cleaning cost, which is smaller, smallest of the 3 buckets, frankly, right? The first 2 buckets will dissipate as we go through -- people get vaccinated, the case count drops, those first 2 big buckets will disappear. The third bucket, I think, in my opinion, it's a strategic choice. There are customers who care and care for a clean store environment, and we'll continue to watch to what extent that makes a difference to people coming in. And so to me, that will be a cost we will continue to drive to the extent that, that matters to our customers, Robby, and it will pay for itself.

That makes a lot of sense. And you mentioned how localized you guys are. Is there anything you can share with us? Have you seen -- as social distancing guidelines are shifting in certain regions, have you seen anything -- any kind of nuggets of wisdom that you've figured out or...?

Not after -- I'd say, the second half of last calendar year, we didn't see that, right? So we didn't see big differences between markets because I -- personally, I just believe we, broadly, in the country, behaved in a certain way, depending on the anxiety level we all had on COVID. I believe we're going to see that going forward. Because now we are not only opening, but we are also -- we have very different laps in different markets, Robby. And -- from last year. That's why I think we'll start seeing different sales levels. At least if I think of it on a year-on-year basis, I think we'll see different differences by market. That's my prediction. But broadly, if I was to think of most of our Q2, 3 and 4, we didn't see the variation between markets. We saw more with -- occur with nationally going up and down.

That's interesting. Is there anything -- some industries are looking at port congestion issues, things like that right now. Are there any product availability issues going on right now or that you think could play out in 2021?

Yes, if -- there are categories where, in my opinion, consumer behavior has changed, if not permanently, at least for quite a while. And that's with household cleaning, personal hygiene, disinfecting, et cetera, et cetera. And in those types of categories, we are still seeing a shortage. We're also seeing shortages where people are cooking more at home, whether it comes down to spices, so we're seeing shortages there; cookware, et cetera, we're seeing shortages there. And the third type of shortage we're seeing is where there was a big shift from away-from-home consumption to in-home consumption, such as canned beverages, right? So that's just the shortage of aluminum. And so we're seeing those 3 types of shortages. And oddly, that has not changed over the last several months. It's the same types of things. Seeing less when it comes to produce and meat, I think that part of the food supply is stable. Some shortages in frozen, clearly, when it comes to that part of the food supply. I think some of these will stay till the suppliers bring on the capacity. But some of these other things, such as cooking and some of the beverage away from home, as some of the beverage consumption shifts back, I think some of those will alleviate as we go into the second half of the year. That's how at least I see it.

That's really helpful. Vivek, I think early in the -- earlier in the pandemic, I think that you had mentioned that you were doing even better in markets where you were not the market share leader. Has that continued to kind of be the case? And do you think you hold those market share gains more? And are you seeing a more consistent store profitability across the chains than maybe you have historically?

In some of the more competitive markets across our country, where we were not #1 by any stretch, we saw a remarkable increase in performance. And I go back to, you asked me a question earlier, I think it goes back to the ability of the local team to react on safety and supply. It was as basic as that at that time. But when people come to a store and they feel like, hey, when I come here, I can get everything I need or almost everything I need, you end up with people consolidating the trip and making that trip a habit, and that has sustained throughout the entire year. That performance sustained throughout the whole year. So I'm proud of those teams there. And what, we spent a lot of time. And in some of those markets, if you think about Phoenix or you think about the Northeast, Chicago, et cetera, Chicago was strong, but -- we've also introduced a loyalty program. So we now have a loyalty program in these markets where we are also keeping people, getting them engaged as they've come in and made them part of the franchise.

That's great. But a question across all retailers right now is the shopping frequency versus the basket size. And how are you guys thinking about that? Does one equally offset the other as you return to normal? Could there be lags in one side versus another? I'm just curious what you guys think may happen?

Yes. Robby, to me, there's been greater engagement and frequency on the fresh side of the store, less frequency, bigger baskets on the rest of the store, okay? My sense is that, that latter still remains. And our challenge is to identify the customers and we're doing it. We've got -- we are going after a very specific customer, seeing where they increased the engagement, and our challenge is to keep them engaged on that rest of the store, right? And the nice thing is we can be very targeted when we do that. I think as people go out, I mean, some of the fresh consumption will come down. And that's where we see our meals program becoming very powerful because we can give you ways to continue to provide -- continue to cook -- have a home-cooked meal without having to go through the hassle of cooking, et cetera. So we're trying to find ways to add to the fresh portfolio so that we can increase the basket size even if you come a fewer times for the fresh portfolio. That's how we're thinking about it. But my sense is it will stabilize again, but maybe over the next 6 months to 8 months, not dramatically.

And maybe here we can shift over to digital and maybe get your thoughts. What do you think penetration of digital will do? Do you think it will stay where it is or pull back a little? Or will it reverse all the way? Or...

I don't think we'll have the -- my sense is that those who've engaged in it are going to stay in it, and then it will keep adding from there. We won't have the same growth rates, but we're not going to give up the consumption that people have today, right? In the sense, if you've tried it and you like it, you're going to make that part of your repertoire. What we like most is people who are engaging in both channels. They use the digital channel for larger baskets, they're still coming in often to pick up a lot of the fresh. We love that because they spend a lot more money. So our -- we are very focused on continuing to build it, build the digital capabilities, build that digital business because that's where the shopper is going. We want to continue to offer them choices, both Drive-Up and Go and shorter delivery windows. But I think it's here to stay. I don't see it pulling back from a volume dollar standpoint. I see the growth rate slowing down relative to the pandemic, I mean.

Have you altered how much money you're going to spend on the digital investments that you think you're going to be making going forward?

Clearly, clearly. We've stepped up digital investment in all of 2020. We -- our plan is to continue to step up our digital investments, that's both on the app side and the software side of things, but also on the hardware side of it. So expansion of DUG, MFCs, happy to talk about that and all of that. We continue to see more investment going there. No question.

And maybe as part of that, would love to get sort of an update on MFCs in general. How many -- remind us how many you're going to do? And I think a lot of people would be interested in some of the economics of MFCs and are there new archetypes? And really, anything you can tell us about that?

Sure. Robby, we've been at that -- we've had 2 running now for about 15 months. And of course, we lost a little bit of time with COVID and through all those disruptions. But that said, we've learned a lot about MFCs. And I have to tell you, there is a learning curve, full stop, on how to optimize it and how to make it part of the operation. There's 2 things that -- first, we've got 2. We're going to do 7 more this year. And we're going to do 7 more this year because we're excited about the technology. We like it. There's 2 things that you've got to solve. Number one is you put the capital in, and you have to drive the demand up to make the capital return, and that comes with some time. But the other piece is that you've got to get the labor cost per order down, right? And the way you get the labor costs per order down is by optimizing the assortment in the MFC and having to reduce the number of times you go to the store to complete the order and such. And so that -- and there's things you can do. If you are out of stock, it affects you. And so we've learned all of those things. And so we're now developing software capabilities to sort that out, and we're developing labor models to sort that out. We're going to roll out 7 more, and we're going to try different archetypes. One is where it is, again, continues to be connected to a store. Another one is where it's next to a store, an independent, kind of, if you think of it that way, but we're able to bridge it. Another one would be where we have a hub-and-spoke model. We're trying all of these different configurations as we go into it this year so that we can start thinking about then when we scale it, what archetype fits best for what market, right? So that's the stage we are in. From a cost standpoint, we -- when we get to -- we think we get to a place where we would be indifferent to an order picked at an MFC because the labor cost per order will be indifferent to what the typical cost per order is at a store, if we think of it that way, right? And that's what we're working towards. And we feel we can get there.

And Vivek, are you working with one partner or multiple partners? How are you kind of going at this?

Our current installations are with Takeoff. And that's the next few that they're going to be rolling out.

Got you. And how are you thinking about last mile delivery partners these days? Any changes there?

The last-mile delivery, we have our first-party business, which is our own trucks that do it. They do a bit of a milk run. It is not the most efficient, Robby, it's not that efficient at all. But there's a set of customers who care for it and pay for it. We believe that the last mile, we're better off using third parties because it's more of a point-to-point and the third parties can get a lot better utilization out of a driver because of the number of businesses they can support, not just our business. And so that's the direction that we're going in using third parties for it. And as you know, there are many different operators there. We have a great partnership with Instacart at this time, but we believe that the third parties will be the solution for the delivery in the last mile. It also allows us to do what we think is very, very important, is a 2-hour window, which, by the way, is another reason we like the MFCs because it keeps -- we're putting the automation very close to where you live. We're putting the automation where you can still leverage what's happening in a store. So you're not giving up the ability to get a floral arrangement or bake a cake or get a custom cut of meat and so on that we provide today in our stores. So it allows for that local nature and speed when you do an MFC.

And how -- the third-party partners, can you remind me how much picking they do? Or do you guys do all the picking in the stores?

There are all -- there are both types. There are -- we have our own first-party business where everything is taken care of by us. By the way, the fastest-growing piece in our entire portfolio is Drive-Up and Go, right, not just from a physical expansion but from a growth per store, Drive-Up and Go is by far the largest growth -- fastest growing and substantial business now. That, we are doing all our picking. And then there are other models where a third-party might come in, pick the whole thing and deliver it. And there's models where we pick it and have a third party deliver it. So all 3 are in play all the time. And our -- we're putting a lot of energy into making sure that we can continue to elevate the picking algorithms. And at the end of the day, we should be best at picking in our store as people learn our store and we can get the algorithms really tight.

And can you give any color on just the profitability of digital? And has it improved a lot over the last year? And is Drive-Up and Go the most profitable digital transaction?

That's it. Robby, the Drive-Up and Go seems to be getting the most traction with the U.S. consumer now, not just in our business, but you can hear others in different -- other retailers talk about the same thing, we may be using a different language on it. It is also the most profitable because what we -- all we have is the picking cost and we are getting more and more efficient at picking. So that's the place that -- that's most -- that's the profitable side of it. When you get to the delivery, at this point, it's still hard to make up the cost of the delivery, right? And there's a differential there. But even that, my belief is that as the delivery providers get more efficient and concentrate more business in a square mile, their costs come down, right? So -- but that will play out over time, but the Drive-Up and Go piece is profitable.

Are there any other solutions you guys are thinking about on the digital side that...

Yes, yes, we've got -- you might have seen a little tot -- a robot that's going around delivering stuff for us. I mean, I love it. The team is always experimenting with different things. We have some lockers in places. We call it Walk-Up and Go, where -- it's a different model, right? So you can -- instead of a milk run with a truck, you take a truck somewhere, you fill up a bunch of lockers and you go, pretty efficient, right? Now -- and the customer is able to pick it up in a certain window. We're trying that in Chicago. I think there's going to be continued innovation to reduce this cost of last mile, where -- and even with the customer picking it up, it's a different form of DUG, but we're trying all of these out.

And I think another topic I wanted to make sure I cover with you was loyalty and personalization. What are the initiatives now? What happened to loyalty and personalization through the pandemic?

Yes. There are 2 types of growth opportunities for us. The first one, the simpler one is increasing penetration in different markets, Northeast markets, Chicago, et cetera. And there, we are finding incredible uptake when we offer loyalty. And I come back to, when people shop a lot more, then points matter more, okay? So -- and the way we get people to engage is by offering a very attractive price point for people to get in and they get in and then they enjoy it. We're also removing friction, so getting -- or finding easier ways for people to get into the program, just put a number in the pad, we send your text, you engage, and bam, you're in. We're trying to reduce friction there. So that's one. So it's just increasing the enrollment into the program. The other place is engagement into the program. And that's where we're excited that we are experimenting in many places, offering things that go beyond the grocery reward or a fuel reward or a better price somewhere. It's offering things like an experience, a wine tasting experience, right, and to some of our most loyal customers, it's a different angle on it. They think of it much more on what the world of hospitality has done. We want to go in that direction because what we learned, I mean, what -- Robby, the one thing I've learned through this pandemic is that there have been customers engaged with us for a long time on a value-based loyalty and have never gone up the ladder. When they suddenly got e-commerce, their spend tripled with us, right? So we've learned that there are different triggers for people for loyalty. And that's what we're going to explore. And as we go into '21, you'll see more of that coming out in the market.

That's great. You mentioned towards the beginning of the interview here that you're seeing some trade up patterns and everything through the pandemic. With the stimulus and maybe as we exit the pandemic, what do you think the behavioral changes will be? And maybe remind us in a normal environment, when you get this kind of stimulus that seems to be targeted more towards the lower end of the consumer spectrum, what do you guys typically see?

Yes. Robby, I think what you've seen is people having the money to spend on food and frankly, not much else over the last year. And as a result, people spending more money on seafood, better cuts of meat, more -- buying wines that are more than $20, shellfish and so on, so forth. So we've just seen, I think, people consuming what they've missed at restaurants at home, right? And the final -- the question really is, are people going to go and give all that up because they want to go spend the money elsewhere? Are we all going to say, I'll dump down the quality of what I eat because -- that quickly, especially when you have the money, right, especially when you have the money. So I predict that, that behavior is going to continue for a while. Even when volumes drop, as the volumes shift away from home, I think you're going to see people still engage in higher quality food in our store across the footprint of the store. So I think that will continue. And so -- and even, for example, I talked to you about meals. Our meals, some of the best programs we have are things that are prepared in store. So it's really high quality at a good value, and you'll recognize the quality of it because it was just cut there in the store just a few hours earlier. So that's how I see this at least proceeding. I don't know to what extent it's certainly the stimulus, but I'm betting on the fact that there's about $1.8 billion of extra savings to begin with, right, before the stimulus that people will spend.

That makes sense. And can you remind me what the relative momentum of your private brands versus the national brands has been through all this?

Yes. Slowed down in the beginning. So if you think of it as penetration, our penetration dropped a couple of points during the beginning of the pandemic and it's back up to 25%, like it was pre-pandemic, right, the last several periods. And the reason is, I think it primarily is a supply issue. So when you think about early in the pandemic, we had less supply and whole shelves would disappear, right? So if the A brand and a B brand and the own brand were the primary sellers pre-pandemic, when everything sells, your share drops by definition, right? So that was happening. And I think that part has stabilized. Our supply is coming back. Our innovation is doing really well. So there was some talk earlier, Robby, that people are going back to brands and own brands are taking a backseat, not from a consumer standpoint. I think it was a supply standpoint, and you're seeing the consumer come back. And it's 1,000 basis points more margin. So we love that. We love growing the own brands portfolio. We will get to 30% in the next few years here.

Has there been any change in the launch schedule for new products within those private label brands?

No. No, no. We continue to do it. We pushed for a couple of different things. One is we have pushed for more premium. And we pushed for more value at the same time. And the value has come in larger packs, right? Interestingly, people are buying large packs because you're eating more at home, there's more people at home, and they get good value from it. So you'll find people buying a large pack of chicken and shellfish, right? So it's the combination that's fascinating, and we've done that with the own brands.

So when you look at Albertsons' numbers during the pandemic, did people eat healthier? Or did they do more natural organic? Or was -- did they -- or they ate a lot of potato chips or what happened?

They ate a lot of everything. So yes, I wish I could say people ate healthier. No, not the case. I think people -- yes, there was -- we sold a lot more organic, of course. But we also sold a lot more ice cream and a lot more chips and a lot more in the bakery. And so I think I would say people have made choices to eat healthy, but also people have made explicit choices to indulge and have some fun, which is just fine. It's the right thing.

That makes a lot of sense. We're running out of time, but this isn't my favorite question, but I always get this question. Can you just -- you get asked this all the time. How is Albertsons thinking about pension liabilities? Any changes there? Your balance sheet, obviously, has been really strengthened over the last year. Just any thoughts on that and capital allocation would be probably a great way to end.

Yes. So Robby, on the pension, there's no change in our fundamental philosophy. The pension liabilities are primarily on the multi-employer pension plans. And our philosophy there is always to go much more to a defined benefit plan. It's not a balance sheet liability, not a liability in the true sense of the word. And you've seen some movement in the new stimulus on that front. More to come on that as we learn what exactly that is. So our fundamental philosophy has not changed on that. When it comes to capital allocation, I just go back to growth. It's growth, growth, growth. We are going to put more energy into digital, more energy into our stores, get ready for where we think the consumer is going, especially in terms of making things convenient for them in meals and such. But that's where our primary energy is going. We'll continue to be responsible about share buybacks, continue to be responsible about our debt pay downs, right? Those are planned, and we'll continue to do that as we had planned it on that front, but we're prioritizing growth.

Terrific. Vivek, always great to have you at the consumer conference. Thank you for joining, and we will do this again soon, hopefully.

Thank you, Robby. Thank you. Thank you all.