Ahold Delhaize ramps up Q3 U.S. sales growth

Global food retailer Ahold Delhaize built on sequential and prior-year net and comparable sales gains in its U.S. business for the fiscal 2022 third quarter.

For the quarter ended Oct. 2, Ahold Delhaize tallied U.S. net sales of $14.75 billion, up 8.8% at constant exchange rates (27.4% actual) from $13.55 billion a year earlier, the Zaandam, Netherlands-based company said Wednesday. Comparable sales grew 8.6% year over year and were up 8.2% excluding fuel.

The results for Ahold Delhaize USA topped gains of 7.7% in net sales and 7.4% (6.4% excluding fuel) in the second quarter and increases of 6.8% in net sales and 3.6% in comp sales (2.9% excluding fuel) in the fiscal 2021 third quarter.

Ahold Delhaize noted that U.S. comp sales benefitted by about 0.4 percentage points from weather and calendar shifts. Food Lion turned in the top performance among U.S. retail banners, marking 40 consecutive quarters of comp-sales growth, while Hannaford posted its 27th comp-sales gain over the past 28 quarters.

“The vast majority of our leading local brands continue to gain or maintain market share,” Ahold Delhaize President and CEO Frans Muller said in a statement. “Notably, during the quarter, our two biggest brands achieved significant milestones. Food Lion reached a decade of consecutive quarters of positive comparable sales growth, which is a remarkable achievement. Albert Heijn [Netherlands] continues to win market share by focusing on providing value for customers in an increasingly challenging environment.”

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Stop & Shop — the largest chain by sales at Ahold Delhaize USA, which also includes grocery store banners Giant Food and Giant/Martin’s plus online grocer FreshDirect — has remodeled 31 stores for the year to date under its five-year upgrade program. Ahold noted that the remodeled stores continue to beat sales and profit expectations.

“While we can’t control external factors like energy prices, we have continued to work diligently on things that are under our control, and I am pleased we are making good progress,” Muller explained. “For example, at Stop & Shop, we continue to advance on our remodeling program, with over 40% of the store fleet now remodeled since 2018. An important focus area for Stop & Shop is New York City, where we announced a multi-year $140 million investment earlier this year. With the first five store remodels completed, we are encouraged to see all stores trending ahead of plan, with the sales lift driven by increased units and new customer transactions.

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“In addition, the introduction of Stop & Shop’s new Deal Lock savings program, which helps customers capture value by locking in a specific sales price for multiple weeks on both national and private brands, is delivering strong, early chainwide results,” he added.

Expanded and enhanced fresh food departments are a linchpin of Stop & Shop's store upgrade program.

Third-quarter online sales at Ahold Delhaize USA swelled by 20.8% (constant currency) to $1.08 billion from $892 million a year ago, when the company generated 52.9% growth in U.S. e-commerce sales. The gain also surpassed the 16.4% growth reported in the 2022 second quarter.

Overall, Ahold Delhaize USA expanded to 1,471 online grocery pickup sites as of the end of Q3, with plans to grow that to 1,553 click-and-collect points by the close of 2022. That includes Food Lion To Go, which currently is available in 601 stores and slated to expand to nearly 1,000 stores by the year’s end.

On a global basis, Ahold Delhaize posted third-quarter sales of €22.41 billion ($22.28 billion), up 20.8% ( 9.1% at constant exchange rates) from €18.55 billion ($15.74 billion) a year ago. Online sales climbed by 20.2% (11.8% at constant exchange rates) to €2.09 billion ($2.08 billion) in the third quarter. Net consumer online sales were up 17.8% (11.5% at constant exchange rates) to €2.7 billion ($2.68 billion).

Companywide net income in the quarter came in at €589 million, or €0.59 per share (continuing operations), compared with €522 million, or €0.51 per share, a year earlier. The company reported underlying income from continuing operations of €993 million, or €0.70 per share, versus €812 million, or €0.53 per share, in the prior-year period.

“Taking a step back and looking at the big picture, I am equally encouraged about our progress on the key levers of our ‘Leading Together’ strategy. Our omnichannel transformation is central to this strategy, driven by customers' desire to shop whenever and wherever they want,” Muller stated. “In Q3, [global] net consumer online sales increased by 11.5%. Our online grocery sales were up 16.9%, with strong growth in both regions as we continued to invest in new and innovative high-tech omnichannel solutions. Our ‘Save for Our Customers’ cost savings program remains on track to produce savings of more than €850 million [$845.1 million] in 2022. These annual programs help our great local brands absorb cost increases to invest in better customer propositions and to keep shelf prices as low as possible.”

Ahold Delhaize wrapped up the 2022 third quarter with 7,625 stores in the U.S., the Netherlands, Belgium and Central and Southeastern Europe, compared with 7,343 a year earlier, for a net gain of 282. Ahold Delhaize USA had 2,050 stores as of the quarter’s end, for a net increase of six locations after 11 stores were opened or acquired and another five were closed or sold.

"Ahold Delhaize’s high-quality own-brand assortments and cost-saving programs have generated additional value for customers in an increasingly challenging environment," CFRA Research analyst Danny Yeo said in a research noted. "Following the robust Q3 2022 earnings, Ahold Delhaize has raised its guidance for underlying EPS growth for 2022 to low double-digit growth (from mid-single digits), which is highly achievable."