Global food retailer Ahold Delhaize built on a solid start to fiscal 2022 in its U.S. business with strong net, comparable and online sales growth for the second quarter.
For the quarter ended July 3, net sales at Ahold Delhaize USA totaled $14.43 billion, up 7.7% (constant exchange rates) from $13.4 billion a year earlier, lifted about 0.9% from calendar shifts, Zaandam, Netherlands-based Ahold Delhaize said Wednesday. Comp sales climbed 7.4% year over year and were up 6.4% excluding fuel.
The results came after a 2.7% net sales gain and 0.5% dip (-1.5% excluding fuel) for comp sales in the 2021 second quarter , when the company cycled large, pandemic-driven increases, and growth of 5.8% in net sales and 4.1% (3.3% excluding fuel) for comp sales in the 2022 first quarter.
Ahold Delhaize USA "increased market shares in the majority of our markets" during the second quarter, Ahold Delhaize CEO Frans Muller noted. (Photo courtesy of Ahold Delhaize)
“Our brands’ strong value propositions are reflected in increased market shares in the majority of our markets,” Ahold Delhaize President and CEO Frans Muller said in remarks for the second-quarter report. “This is particularly visible in the U.S., where the consistent and robust performance of our U.S. brands continued. In the quarter, net sales increased by 7.7% at constant rates, and we maintained a healthy underlying operating profit.”
Underlying operating margin for Ahold Delhaize USA was 4.7%, down 0.3 percentage points (constant exchange rates) versus a year ago. The company’s U.S. grocery retail brands include Stop & Shop, Giant Food, Giant/Martin’s, Food Lion and Hannaford, as well as online grocer FreshDirect.
“Food Lion continues to perform strongly, achieving its 39th consecutive quarter of growth and double-digit comparable sales,” Muller said. “Stop & Shop has taken the next steps in its remodeling program with the announcement of a $140 million investment across its New York City stores over the next two years. This targeted investment aims to improve the shopping experience for local customers by adding thousands of new products to the assortment that reflect the diversity of the neighborhoods and communities Stop & Shop serves.” The company noted that Stop & Shop delivered positive comp-store results in the second quarter.
Online sales at Ahold Delhaize USA surged 16.4% to $1.06 billion (constant currency) in the 2022 second quarter, building on a 61% jump to $908 million a year ago, fueled by the acquisition of online grocer FreshDirect (Q2 2021 U.S. online sales rose 29% excluding FreshDirect).
First-half U.S. net sales came in at $28.11 billion, up 6.8% from $26.32 billion in the fiscal 2021 half. Comparable sales advanced 5.8% (4.9% excluding fuel) versus a 0.5% uptick (flat excluding fuel) a year earlier. Online sales grew 10.1% to $2.13 billion from $1.94 billion in the prior-year period.
On a global basis, Ahold Delhaize posted second-quarter sales of €21.45 billion ($20.17 billion), up 15% (6.4% at constant exchange rates) from €18.65 billion ($15.47 billion) a year ago. First-half sales increased 11.7% (5% at constant exchange rates) to €41.22 billion ($37.76 billion) from €36.91 billion ($30.64 billion) in the prior-year span.
Companywide, online sales climbed by 11.9% (6.1% at constant exchange rates) to €2.03 billion ($1.91 billion) in the second quarter and by 7.8% (3.3% at constant rates) to €4.09 billion ($3.75 billion) for the first half. Net consumer online sales increased by 9.1% (4.8% at constant exchange rates) to €2.67 billion ($2.51 billion) in the quarter and by 5% (1.8% at constant rates) to €5.38 billion ($4.93 billion) for the half.
Ahold Delhaize noted that, in its global online business, the company has decided to suspend its plan to sub-IPO its bol.com e-commerce operation in the 2022 second half. “Considering current equity market conditions, we have decided that the second half of 2022 is no longer the right time to sub-IPO bol.com,” explained Muller. “We remain committed to securing the right future path to unlock value for bol.com and Ahold Delhaize, and will revisit opportunities when market conditions are more conducive.”
Second-quarter net income was €603 million, or €0.60 per share (continuing operations), compared with €540 million, or €0.52 per diluted share, a year ago. For the first half, net income totaled €1.15 billion, or €1.14 per diluted share (continuing operations), versus €1.09 billion, or €1.05 per share, in the 2021 half.
“We had a strong second quarter. Our overall results confirm the strength and breadth of our brand portfolio,” Muller stated. “Our brands’ unparalleled understanding of customers, broad assortments and product offerings, as well as the stickiness of food-at-home consumption, are giving us the opportunity to play to our strengths and support customers in a challenging environment.”
Looking ahead for fiscal 2022, Ahold Delhaize raised its earnings guidance. Citing strong first-half earnings and other macro-economic, foreign exchange and interest rate factors, the company now projects mid-single-digit growth in underlying earnings per share, compared with its previous outlook of a low- to mid-single-digit decrease.
“Despite the expectation that challenging times remain ahead, I am confident that our brands are on the right path to support customers and deliver on our goals,” Muller said. “Our half-year results exceeded our expectations. We have positive momentum going into the second half of the year.”
Ahold Delhaize closed out the 2022 second quarter with 7,591 stores in the U.S., the Netherlands, Belgium and Central and Southeastern Europe, compared with 7,263 a year ago, a net gain of 328. Ahold Delhaize USA ended the quarter with 2,048 stores, a net increase of four locations from 2,044 in the prior-year period, including nine opened or acquired stores and five closed or sold stores.