Albertsons (ACI) could face weaker sales and margin pressure in Q2 as consumers remain cautious, while ACI Edge savings should become more meaningful later in the year, with limited changes expected to full-year guidance, UBS said in a note emailed Wednesday.

UBS expects Q2 core same-store sales to fall 1.2%, compared with the 0.9% decline expected by the market, as shoppers remain under pressure and continue seeking lower-priced options.

The investment firm said it expects about 55 basis points of operating margin pressure in Q2 and forecasts adjusted earnings of $0.30 per share, below the $0.33 consensus estimate.

ACI Edge will likely take time to deliver savings, with more benefits expected in H2, UBS said, adding that it sees longer-term potential in Albertsons' retail media business, though it said the company will need to decide how to position the business as shoppers increasingly use generative AI and digital agents.

UBS maintained Albertsons' neutral rating and $12 price target.

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