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11/09/2022

Ahold Delhaize Logs Higher Q3 Sales, Earnings

Retail conglomerate attributes much of its success to cost savings amid high inflation
Bridget Goldschmidt
Managing Editor
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In the United States, Ahold Delhaize's net sales came to €14.7 billion (USD $14.8 billion), an increase of 8.8% at constant exchange rates, and up 27.4% at actual exchange rates.

In its third-quarter results, Ahold Delhaize reported that group net sales increased 9.1% at constant exchange rates (20.8% at actual exchange rates) to €22.4 billion, or USD $22.5 billion. Meanwhile, Q3 comparable sales excluding gas ramped up in both the United States and Europe versus second quarter, growing 8.2% in the United States and 7.4% in Europe.

“Increased market share in most of our brands reflects strong loyalty to our locally tailored customer value propositions,” Ahold Delhaize noted.

Additionally, net consumer online sales rose 11.5% at constant exchange rates, with net consumer online sales in grocery growing 16.9% at constant exchange rates, “as we continue to invest in new and innovative high-tech omnichannel solutions,” according to the company.

The company attributed much of its success to its €850 million (USD $853 million) Save for Our Customers cost savings program, which enables its brands to work with suppliers to mitigate cost hikes for customers, offer more entry-priced products, grow high-quality own-brand assortments and deliver personalized value via digital omnichannel loyalty programs.

In the United States, net sales came to €14.7 billion (USD $14.8 billion), an increase of 8.8% at constant exchange rates, and up 27.4% at actual exchange rates. U.S. comps sales excluding gasoline rose by 8.2%, benefiting by about 0.4 percentage points from the net impact of weather and calendar shifts. Food Lion continued to lead brand performance, marking 40 straight quarters of positive sales growth.

Q3 online sales in the segment were up 20.8% in constant currency, on top of 52.9% constant currency growth in the same quarter last year. Underlying operating margin in the United States was 5.0%, up 0.2 percentage points at constant exchange rates from the year-ago period.

“Empowering customer choice by providing great value and easy access to affordable and healthy food options is at the center of the customer value proposition in all of our nineteen great local brands,” said Ahold Delhaize President and CEO Frans Muller. “Our positive market share development and resilient financial performance in Q3 highlight the trust customers continue to place in our brands.”

Noting the impact of “[h]igh inflation, increasing interest rates, slowing economic growth and the war in Ukraine” on customers’ spending power, as well as “[h]igh energy prices [that] are also disrupting supply chains,” Muller observed: “With a deep understanding of commodity prices, built through our extensive experience with own-brand products, our teams play an important role in the value chain and work hard on behalf of customers to ensure realistic pricing. In the face of increasing price pressures, it is everyone's job, across the value chain, to keep prices as low as possible for customers. To this end, we continue to engage diligently and proactively with partners, making clear choices on assortment when necessary. We are also adapting our organization and processes to rising costs by increasing efficiencies and mitigating costs wherever practical and possible.”

Muller also cited such progress as more than 40% of Stop & Shop stores having undergone renovation since 2018, with the first five store remodels successfully completed in New York City; the rollout of Stop & Shop's new Deal Lock savings program, which helps customers capture value by locking in a specific sales price for several weeks on both national and private brands; the company’s ongoing omnichannel transformation through investment in high-tech solutions; and plans for Peapod Digital Labs to build an end-to-end in-house retail media business, building on the existing AD Retail Media network.  

In the area of sustainability, he said: “Our brands continue to work hard to bring meaningful initiatives to customers in stores and online. We are well on track to again deliver on key milestones related to growing our share of healthy sales, decreasing food waste and reducing the carbon emissions of our own operations.”

Based on its Q3 performance, including “[b]etter-than-expected underlying U.S. results,” Ahold Delhaize said that it would increase its full-year EPS outlook, now forecasting low-double-digit 2022 diluted underlying earnings-per-share growth versus the prior mid-single-digit guidance. The 2022 free cash flow outlook remained at about €2.0 billion, with net capital expenditures expected to total about €2.5 billion.

Ahold Delhaize USA, a division of Zaandam, Netherlands-based Ahold Delhaize that operates more than 2,000 stores across 23 states under the Food Lion, Giant Food, The Giant Co., Hannaford, and Stop & Shop brands, as well as e-grocer FreshDirect, is No. 10 on The PG 100, Progressive Grocer’s 2022 list of the top food and consumables retailers in the United States

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