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Ahold Delhaize Logs Higher U.S. Comp, Net and Digital Sales in Q3

Results prove ‘resilience of business model’: CEO
Ahold Delhaize Logs Higher U.S. Comp, Net and Digital Sales in Q3
Ahold Delhaize President and CEO Frans Muller noted that the company's banners, including those in the United States, built further on 2020's COVID-19-related sales gains.

In reporting its third-quarter results, Ahold Delhaize noted that on a two-year comparable-sales growth basis, comps excluding gasoline in the United States were up 15.3% and in Europe were up 7.3%, both of which remain high relative to historic levels. In the United States, Q3 comparable sales excluding gas rose 2.9%, on top of 12.4% growth from the year-ago period, as elevated food-at-home demand continued. In Europe, comps were flat (down 0.2%), following 7.5% growth in the prior year.

Meanwhile, Q3 group net sales were €18.5 billion (US $21.2 billion), up 4.6% at constant exchange rates, and Ahold Delhaize’s Q3 net consumer online sales grew 29.2% at constant exchange rates, building on top of the considerable 62.6% growth logged in Q3 2020.

U.S. net sales increased 6.8% at constant exchange rates and 5.8% at actual exchange rates. Q3 comps were adversely affected by about 0.8 percentage points from an unfavorable calendar shift. Salisbury, N.C.-based Food Lion continued to lead in brand performance. Q3 online sales in the United States were up 52.9% in constant currency, driven by the ongoing expansion of click-and-collect facilities and the acquisition of Bronx, N.Y.-based FreshDirect. Excluding the FreshDirect acquisition, U.S. online sales rose 26.2% in constant currency, on top of the 114.7% growth recorded in the same quarter last year. Underlying operating margin in the United States was 4.8%, down 0.2 percentage points at constant exchange rates from the year-ago period, which had benefited from unusually low shrink levels and a favorable sales mix due to a COVID-19-related spike in demand.

“Our Q3 results once again showed the resilience of our business model, with our brands building further on 2020's COVID-19-related sales gains, as various societies across our markets reopened in the quarter,” noted Ahold Delhaize President and CEO Frans Muller. “During these ever-changing times, we remain proud of the significant efforts of associates in all our brands and businesses, who continue to tirelessly serve our communities.”

Added Muller: “Many consumer habits formed during the COVID-19 pandemic favoring food-at-home consumption and a focus on healthier eating are proving resilient, and we continue to make significant investments to address these trends.”

During the quarter, the retail conglomerate also added 102 new click-and-collect locations in the United States, and among the e-commerce programs that it plans to roll out is Ship2Me at Landover, Md.-based Giant Food. Muller described Ship2Me as “an online marketplace solution, initially offering an additional [approximately] 40,000 general merchandise and food items.

“We continue to solidify our position as an industry-leading local omnichannel retailer by executing our strategy to improve supply chain, advance omnichannel offerings, and enhance omnichannel productivity," he further observed. “To improve the efficiency of our supply chain, the U.S. business has now achieved self-distribution for 65% of center store volume, and remains on schedule to transition to a fully self-distributed network in 2023.”

Muller went on to mention The Giant Co.’s new e-commerce fulfillment center that just opened in Philadelphia, noting that the Carlisle, Pa.-based chain’s “facility is part of our efforts to drive growth and efficiencies in our online operations. 

He also provided an update on Ahold Delhaize’s progress in advancing its Healthy and Sustainable Strategy: “Our MSCI ESG ranking has been upgraded to an ‘AA’ ranking from our previous ‘A’ ranking, putting Ahold Delhaize in the top 25% of all companies measured. The ranking reflects our efforts to reduce carbon emissions, mitigate risks and ensure we have great diverse talent. ... Furthermore, we have joined the Science Based Targets initiative (SBTi) Business Ambition for 1.5°C, a global coalition of UN agencies, business and industry leaders, in partnership with the Race to Zero.”

Muller promised more details on the company’s projects and goals at its first virtual Investor Day event on Nov. 15.

Ahold Delhaize’s Q3 results “provide management with the confidence to raise the 2021 outlook for underlying operating margin, underlying EPS growth and free cash flow,” according to the company, which issued guidance for the group underlying operating margin of approximately 4.4%, underlying EPS in the low- to mid-20s range versus 2019, and free cash flow of approximately €1.7 billion (US $2 billion).

Ahold Delhaize USA, a division of Zaandam, Netherlands-based Ahold Delhaize operates more than 2,000 stores across 23 states and is No. 10 on The PG 100, Progressive Grocer’s 2021 list of the top food and consumables retailers in the United States.

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