Strong performances at Food Lion and Hannaford in particular helped drive a 9.2% increase in fourth-quarter sales at Ahold Delhaize’s U.S. business in 2022, Frans Muller, CEO of Ahold Delhaize, told SN on Wednesday.
Same-store sales at both Food Lion and Hannaford were up in double-digits, he said, and Stop & Shop also performed well. Overall U.S. comparable-store sales, excluding gasoline, were up 9.3% in the fourth quarter, which included 0.5 percentage points from the net impact of weather and calendar shifts.
Looking ahead, Muller said he expects inflation to continue to moderate, although higher prices will continue to impact the company’s operations, he said.
“We have had negative [unit] volumes at a lot of our brands because inflation is higher than our sales numbers,” he said. “It's the same for the industry, and it is the same for many of the manufacturing companies as well. That will be a challenge this year because negative volumes is not a thing you can have for too long.”
As a result, he expects a big push for retailers and suppliers to seek to drive higher unit volumes through promotions and trade spending in the year ahead.
Another potential challenge, he said, is the reduction of government benefits through the Supplemental Nutrition Assistance Program (SNAP) that is set to take effect on March 1. Although he said he expects the impact will be minimal, it could have some effects on sales.
Overall, however, Muller said consumers in the U.S. have remained resilient despite inflationary pressures. For those seeking value, Ahold Delhaize has sought to appeal to them through its strong private label program and an overall emphasis on offering savings opportunities, while at the same time cutting costs out of its operations to help maintain a competitive price position.
“We see that customers are making more conscious choices in stores when they look at price-quality relationships,” Muller said.
Muller said he expects that the company grew its market share in several U.S. markets, including the Carolinas with Food Lion and in some Northeastern and New England markets with Stop & Shop and Hannaford.
In reporting fourth-quarter results, the company said it was particularly pleased with remodeling efforts at Stop & Shop stores in New York City, where revamped stores are seeing double-digit sales growth and exceeding expectations. The company said it plans to remodel eight more New York City stores in the first quarter and roll out key learnings from those efforts to 40 other Stop & Shop locations throughout the year.
Ahold Delhaize reported U.S. sales across all of its banners totaled almost $19 billion in the fourth quarter. Sales were up 7.9% for the full fiscal year, at constant exchange rates, to about $58.9 billion, compared with year-ago results.
U.S. operating income was up 16% for the quarter, to about $914 million, and rose 3.9% for the year, to about $2.8 billion.
Online sales in the U.S. also performed well, the company said, rising 17.3% for the fourth quarter, to about $1.2 billion, and 14.5% for the year, to $4.4 billion.
Muller said the online business in the U.S. has evolved in recent years to become heavily focused on click-and-collect, as opposed to delivery. The company has become much more efficient at picking orders for customers and getting them into customers’ hands when they arrive at the store, using technology to make the process more convenient for customers and more cost-effective for the company.
“It’s a very good model — very efficient for customers, and it serves us well too,” he said.
In addition, online basket sizes are “much larger” than a traditional in-store basket, Muller said.
Overall, Ahold Delhaize reported a 15.1% increase in sales for the year, to about $92.8 billion.
Asked about the potential for Ahold Delhaize to acquire any stores that might be divested through the pending Kroger-Albertsons merger, Muller said the company was eyeing the situation closely and remains committed to growing in its existing and adjacent markets.
He said he does anticipate further consolidation in the industry, and perhaps some store sales from independent operators who might not want to make the required investments to compete in a more digitally oriented environment.
