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Ahold Delhaize U.S. comparable sales rise 4.1% in first quarter

Online sales gain after triple-digit growth in year-ago period

Russell Redman

May 11, 2022

5 Min Read
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Globally, Ahold Delhaize saw comp sales edge up 0.7% excluding fuel, reflecting a 3.3% uptick in the U.S. and a 3.1% decline in Europe.Ahold Delhaize

Global food retailer Ahold Delhaize got off to a solid start in fiscal 2022 with first-quarter net and comparable sales gains atop prior-year growth in the United States, its largest business unit.

In the quarter ended April 3, net sales at Ahold Delhaize USA climbed 5.8% to $13.68 billion from $12.93 a year earlier, when the company posted a 3.6% increase, Zaandam, Netherlands-based Ahold Delhaize reported on Wednesday. The retailer said sales benefited from favorable foreign currency translation rates, last year’s acquisition of stores from Southeastern Grocers and higher fuel sales.

U.S. comparable sales rose 4.1% overall and were up 3.3% excluding fuel, building on a 1.5% uptick (1.7% excluding gas) in the 2021 quarter. The growth was partially offset by a 0.6% negative impact from weather and calendar shifts, mainly from the timing of Easter, according to Ahold Delhaize.

Underlying operating margin for Ahold Delhaize USA came in at 4.4%, down 0.4 percentage points (constant exchange rates) versus a year ago, due to increased labor, distribution and energy costs, partially offset by higher pricing and cost-saving efforts, the retailer noted. 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.

Related:Ahold Delhaize USA transitions York, Pa., warehouse to self-distribution

“In the U.S., we were able to grow comparable sales by 3.9% excluding weather and calendar shifts and maintained relatively stable underlying operating profit in U.S. dollars, as strong food-at-home demand and our cost-savings initiatives enabled our brands to mitigate incremental cost pressures,” Ahold Delhaize President and CEO Frans Muller said in remarks for the first-quarter report. “Food Lion, in particular, with its 38th consecutive quarter of growth, is one of the top-performing brands in the U.S., right now with close to double-digit comparable sales.”

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Ahold Delhaize CEO Frans Muller said the company aims to grow market share in New York City via accelerated collaboration between FreshDirect and Stop & Shop.

 

First-quarter online sales for Ahold Delhaize USA edged up 4.6% to $1.08 billion from $1.03 billion in the prior-year period, when e-commerce sales had surged 188.3%.

“As the industry is rapidly shifting to more same-day delivery options, we are positioning ourselves to accelerate in this space,” Muller told analysts in a conference call on Wednesday morning. “For example, in the U.S., we have over 1,400 pickup points and have added new instant delivery options with partners such as Instacart.”

Related:Ahold Delhaize USA, ExxonMobil target circular food packaging

On the e-commerce front, Peapod Digital Labs also made investments in fulfillment operations, both in-store and in central fulfillment warehouses, to automate picking and optimize delivery routes to get orders to customers faster with less manual effort, Ahold Delhaize reported.

“We also made good progress with Stop & Shop and FreshDirect, where we plan to increase collaboration to accelerate growth and market share in New York City,” Muller said in the call. “I look forward to sharing more on this in the second half of the year.”

Among other highlights during the first quarter, Ahold Delhaize USA expanded the Guiding Stars nutrition navigation program across all beverages, and The Giant Company and Giant Food doubled the points earned for all Guiding Stars-rated items. Giant Food, too, expanded its More for You value campaign introducing bulk items, and plans call for the concept to roll out to more stores in the second quarter.

In addition, Stop & Shop launched “The Helpful Chef” omnichannel program to deliver convenient and affordable meal solutions to customers, and the supermarket chain continued its multiyear remodeling program, with 40 more stores expected to be completed in 2022. Ahold Delhaize noted that the upgraded stores are meeting sales and profit expectations.

“Importantly, in the quarter, Stop & Shop signed and ratified a new four-year labor contract with unions representing over 60% of the Stop & Shop workforce,” Ahold Delhaize Chief Financial Officer Natalie Knight said in the call. “As such, we have no other significant labor negotiations outstanding at this time.”

Globally, Ahold Delhaize posted 2022 first-quarter sales of €19.77 billion ($17.63 billion), inching up 8.3% (3.6% at constant exchange rates) from €18.26 billion ($15.17 billion) a year ago. Comp-sales inched up 0.7% year over year ( 3.3% in U.S., -3.1% in Europe) excluding fuel. Companywide, net consumer online sales rose 1.3% to about €2.72 billion ($2.43 billion) but at constant exchange rates were down 1%.

“We are very well-positioned with our own brands relative to peers,” Muller noted to analysts. “In the Benelux, own brands represent over half of all brand sales, and in the U.S. own-brand penetration stands at approximately 30%. We will continue to extend our brand and invest in their presence and visibility in stores and online throughout 2022.”

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Plans call for another 40 Stop & Shop stores to be remodeled in 2022.

Net income (continuing operations) in the 2022 first quarter came in at €546 million ($487 million), or €0.54 (48 cents) per diluted share, down from €550 million ($456.9 million), or €0.53 (44 cents) per diluted share, a year earlier.

“Higher-than-expected Q1 earnings, coupled with a more resilient consumer client climate in the U.S., as well as a stronger U.S. dollar, are forecast to more than offset challenging economic backdrop we now see in Europe,” Knight said of Ahold Delhaize’s fiscal 2022 outlook. “Therefore, we expect underlying EPS to be higher than our previous guidance of a low- to mid-single-digit decline and instead be comparable with our 2021 levels. Free cash flow is expected to be approximately €1.7 billion. Net capital expenditures are expected to total a maximum of €2.5 billion and, therefore, be lower than our original expectations as a percentage of sales this year.”

As of the end of the 2022 first quarter, Ahold Delhaize had 7,551 stores in the U.S., the Netherlands, Belgium and Central and Southeastern Europe, compared with 7,204 a year ago, reflecting a net gain of 347. Ahold Delhaize USA ended the quarter with 2,046 stores, a net increase of 18 from 2,028 in the prior-year period, including 23 opened or acquired stores and five closed or sold stores.

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About the Author

Russell Redman

Senior Editor
Supermarket News

Russell Redman has served as senior editor at Supermarket News since April 2018, his second tour with the publication. In his current role, he handles daily news coverage for the SN website and contributes news and features for the print magazine, as well as participates in special projects, podcasts and webinars and attends industry events. Russ joined SN from Racher Press Inc.’s Chain Drug Review and Mass Market Retailers magazines, where he served as desk/online editor for more than nine years, covering the food/drug/mass retail sector. 

Russell Redman’s more than 30 years of experience in journalism span a range of editorial manager, editor, reporter/writer and digital roles at a variety of publications and websites covering a breadth of industries, including retailing, pharmacy/health care, IT, digital home, financial technology, financial services, real estate/commercial property, pro audio/video and film. He started his career in 1989 as a local news reporter and editor, covering community news and politics in Long Island, N.Y. His background also includes an earlier stint at Supermarket News as center store editor and then financial editor in the mid-1990s. Russ holds a B.A. in journalism (minor in political science) from Hofstra University, where he also earned a certificate in digital/social media marketing in November 2016.

Russell Redman’s experience:

Supermarket News - Informa
Senior Editor 
April 2018 - present

Chain Drug Review/Mass Market Retailers - Racher Press
Desk/Online Editor 
Sept. 2008 - March 2018

CRN magazine - CMP Media
Managing Editor
May 2000 - June 2007

Bank Systems & Technology - Miller Freeman
Executive Editor/Managing Editor
Dec. 1996 - May 2000

Supermarket News - Fairchild Publications
Financial Editor/Associate Editor
April 1995 - Dec. 1996 

Shopping Centers Today Magazine - ICSC 
Desk Editor/Assistant Editor
Dec. 1992 - April 1995

Testa Communications
Assistant Editor/Contributing Editor (Music & Sound Retailer, Post, Producer, Sound & Communications and DJ Times magazines)
Jan. 1991 - Dec. 1992 

American Banker/Bond Buyer
Copy Editor
Oct. 1990 - Jan. 1991 

This Week newspaper - Chanry Communications
Reporter/Editor
May 1989 - July 1990

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