AMSTERDAM — Ahold here last week said it had sales and market-share gains at all three of its U.S. banners in the third quarter, and retail operating margins improved to help the company beat analysts' profit expectations.
Profits for the quarter were down compared with a year ago, reflecting higher taxes and lower income from joint ventures, but operating income was up about 10%, to about $328 million (U.S.), and retail operating income totaled $357 million, or 4.9% of sales, compared with 4.8% of sales in the year-ago period.
In the U.S., the company said operating income at its Stop & Shop/Giant-Landover division, where it has been rolling out aggressive price reductions as part of its Value Improvement Program, totaled $167 million, or 4.3% of sales, up $17 million over the year-ago results. Year-to-date, operating income was $494 million, or 3.8% of sales, down $45 million from the same period last year.
As previously reported, sales in the division were up 4.4% in the quarter, to $3.9 billion, including identical-store sales gains of 3.8% at Stop & Shop, excluding gas, and 0.6% at Giant-Landover.
At Giant-Carlisle, operating income rose by $8 million in the third quarter, to $50 million, or 4.6% of sales, while sales grew 11.8%, to $1.1 billion. Identical-store sales rose 8%. Year to date, operating income was $173 million, or 4.8% of sales, a gain of $8 million.
“Both [the Stop & Shop/Giant-Landover and Giant-Carlisle divisions] increased their operating profit in Q3, which is particularly pleasing against the backdrop of the turbulent economic conditions,” said John Rishton, president and chief executive officer, Ahold.
He noted that pharmacy sales had a negative impact in the quarter. At Giant-Landover, where pharmacy accounts for 17% of sales, the category reduced same-store sales by 1%, Rishton said.
He said private-label penetration continues to grow following the introduction of several new items in the lowest-price private-label line, called Guaranteed Value. He said he had not noticed any trading down, however.
Overall, Ahold said net income in the quarter slid by $24 million, to about $244 million, while sales were up 3.9% — 7.6% at constant exchange rates — to $7.27 billion.
Year to date, sales were $23.9 billion, up 0.4%, or 7.2% at constant exchange rates. Net income for the year was $994.5 million, down 70.4%.