Coronavirus-fueled demand boosted U.S. net and comparable sales at Ahold Delhaize in the fiscal 2020 second quarter, including nearly 127% growth in online sales.
For the quarter ended June 28, net sales at Ahold Delhaize USA surged 18.7% to $13.04 billion from $10.99 billion a year earlier, Zaandam, Netherlands-based Ahold Delhaize said Wednesday. Comparable-store sales climbed 18.8% and were up 20.6% excluding fuel. Online sales jumped 126.8% to $564 million from $249 million a year ago.
Ahold Delhaize’s U.S. supermarket chains, which stretch along the East Coast, include Stop & Shop, Giant Food, Giant/Martin’s, Food Lion and Hannaford, with e-commerce powered by the Peapod Digital Labs unit. The company said all of the retail brands generated double-digit comp-sales growth in the quarter, due largely to the COVID-19 outbreak and the year-over-year lapping of the impact of the Stop & Shop strike, which trimmed U.S. sales by 3.2% in the fiscal 2019 second quarter.
First-half U.S. net sales came in at $25.53 billion, up 16.2% from $21.97 billion in the fiscal 2019 half. Online sales swelled by 84.3% to $921 million from $500 million in the prior-year period.
“Our strong comparable-sales performance was aided by 127% [Q2] online sales growth, as we were able to convert higher demand for both new and existing customers,” Ahold Delhaize CEO Frans Muller told analysts in a conference call on Wednesday. “We expect this strength in online sales to continue, and we’re now forecasting more than 75% U.S. online sales growth in 2020, which is higher than our previous expectation of more than 50% and the initial expectation of more than 30% growth.”
To help drive that growth, U.S. investments will focus on expanding online capacity, according to Muller. Plans call for same-day online grocery delivery to be added to over 600 Stop & Shop and Food Lion stores, and U.S. click-and-collect locations are slated to grow from 765 at the close of the second quarter to 1,100 by the fiscal year-end.
“Food Lion was our fastest-growing brand and achieved its 31st quarter of consecutive growth, with positive comp sales, and is proving that the high-density store network with its clear focus on fresh and affordable is hitting the sweet spot of what customers are looking for today. We also agreed to acquire 62 stores from Southeastern Grocers, which will be converted to the Food Lion brand, and that should further help improve an already very strong market position in 2021 and beyond,” Muller said.
“Stop & Shop was one of our fastest-growing brands in this quarter as well and, particularly, the ‘Re-imagine Stop & Shop’ stores continued to outperform,” he added. “We expect to open 20 more of these remodeled stores in the second half of the year.”
Globally, Ahold Delhaize reported second-quarter sales of €19.1 billion ($17.36 billion), up 17.1% (15.9% at constant exchange rates) from €16.32 billion ($14.52 billion) a year earlier. First-half sales rose 15.9% (14.3% at constant exchange rates) to €37.31 billion ($33.86 billion) from €32.19 billion ($28.50 billion).
Companywide, online sales climbed by 69.7% (68.7% at constant exchange rates) to €1.35 billion ($1.22 billion) in the second quarter and by 50.8% (49.7% at constant rates) to €2.35 billion ($2.13 billion) for the first half. Net consumer online sales increased by 78.4% (77.6% at constant exchange rates) to €1.85 billion ($1.68 billion) in the quarter and by 59.1% (58.3% at constant rates) to €3.19 billion ($2.90 billion) for the half.
Second-quarter net earnings were €693 million, or €0.65 per share (continuing operations), compared with €334 million, or €0.30 per share, a year ago. For the first half, net income totaled €1.34 billion, or €1.24 per share (continuing operations), versus €769 million, or €0.69 per share, in the 2019 half.
“The engagement and strong execution of our teams helped us translate stronger-than-expected demand in both the U.S. and Europe due to COVID-19 into outstanding results in the second quarter,” Muller said in the call.
“We accelerated both comp sales growth and net consumer online sales growth — both were even better than the high levels of growth we saw in our first-quarter results,” he noted. “This sales development, along with the benefit of comparing against the same quarter last year, when we saw a negative impact from the strike at Stop & Shop brand in the U.S., led to strong group underlying operating margin performance in the quarter and 88% diluted underlying EPS growth.”
More digital and omnichannel investment will help the company “adapt to rapid changes in customer behavior” across its market areas, Muller told analysts. In 2020, online grocery capacity is slated to be expanded by 70% in the U.S. and 40% at the Albert Heijn chain in the Netherlands. That includes four new Stop & Shop “wareroom” online fulfillment centers and a new Bol.com fulfillment center to open later this year.
“Our increased investments in digital and omnichannel capabilities, as well as a continued focus on maintaining our leadership positions in the markets we operate in, should lead to continued wallet share gains,” Muller said. “As a result, we now expect greater than 55% growth in global net consumer online sales in 2020. This puts us on track to reach our goal of doubling global net consumer online sales from €3.5 billion in 2018 to €7 billion in 2020, which is one year earlier than we outlined at our November 2018 Capital Markets Day.”
Ahold Delhaize finished the second quarter with 7,028 stores in the U.S., the Netherlands, Belgium and Central and Southeastern Europe, compared with 6,838 a year earlier, reflecting a net gain of 217. Ahold Delhaize USA saw no net gain in store count, holding at 1,971 stores after 11 locations were opened or acquired and another 11 were closed or sold.
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