Ahold, Delhaize Post Strong Q4 Results Ahead of Merger

Ahold has reported a 21.4 percent increase in fourth-quarter group sales to 9.8 billion euros ($10.7 billion), and a 4.3 percent increase in fourth-quarter sales excluding gas. The Amsterdam-based company’s online sales growth continued to accelerate, with Q4 adjusted net consumer sales up 29.1 percent.

The retail conglomerate further posted net annual sales of 38 billion euros, attributing the result to “excellent store operations, especially during the holiday season, and a strong increase in consumer online sales.

"With a sharp focus on supporting our great local brands and investing to serve the rapidly changing interests and needs of our customers, we have made very good progress and achieved strong operating and financial results for the fourth quarter and the year,” affirmed Ahold CEO Dick Boer. “We challenged ourselves to innovate faster, to bring our customers fresher products in new and different ways, and to deliver greater value. This progress was supported by reinvesting the substantial savings achieved through our company-wide Simplicity program. We are pleased with the response from our customers and appreciate the continued great work of our associates, which led to robust sales performance, market share gains and an increase in group operating income for the year.”

Added Boer: “In the United States, we grew sales excluding gas by 4.1 percent, adjusted for an additional week. We continue to make good progress with our investments in quality and price, highlighted by growth in identical sales and market share gains, primarily in the New York metro market, where we further strengthened our position with the successful conversion of 25 former A&P stores.” Ahold's U.S. store banners are Giant Food Stores, Martin's Food Markets, Giant, and Stop & Shop.

He went on to note that the company’s "online performance was also strong, with a nearly 30 percent increase in consumer sales in the fourth quarter,” pointing out that Peapod remains a leading online grocer in its market area.

Additionally, U.S. own-brand assortment penetration grew 40 basis points to 38 percent on a full-year basis. More than 1,200 new products were developed and launched during the year, including Ahold's first brand to span continents: the Dutch Etos line of HBC products. The company’s natural and organic Nature’s Promise brand continued to show strong double-digit sales growth in the fourth quarter, introducing another 75 products, for a total of more than 800.

 Meanwhile, Ahold’s merger partner, Brussels-based Delhaize Group reported Q4 revenue growth of 14.2 percent, and a 2.3 percent comparable-store sales increase in the United States.

For fiscal 2015, the company posted revenue growth of 15.6 percent, and a 2.2 percent comps rise in the United States.

"Our full-year results confirm our solid performance in 2015,” said Delhaize Group CEO Frans Muller. “We have been able to stabilize or grow market share in all our markets while at the same time investing … to differentiate our banners, improve our infrastructure and expand our network.” 

Continued Muller: “This year, we will further expand our Easy, Fresh & Affordable initiative at Food Lion, and we plan to remodel 142 stores. … Overall, we plan to spend 825 million euros [US $902 million] on capital expenditure (at identical exchange rates). These efforts will allow Delhaize Group to grow revenues, improve our market share and at the same time generate a solid level of free cash flow.”

In Q4, Delhaize’s U.S. revenues increased 2.6 percent to $4.4 billion. Comps rose in spite of retail deflation of 1 percent, driven by planned price investments at both Food Lion and Hannaford and mild weather. Both banners continued to post positive real sales growth of more than 3 percent.

For the full year, Delhaize America generated revenues of $17.8 billion, a 2.2 percent increase from last year. The U.S. gross margin remained flat at 25.9 percent, which the grocer attributed to “cost savings offset by price investments and higher shrink resulting from Easy, Fresh & Affordable at Food Lion.”

Both companies were upbeat regarding the progress of their impending merger, which is on track to occur by midyear. 

“The combination of Ahold and Delhaize will create an even better retail leader for customers and associates, and will enable us to further build on the position of our respected and popular local brands in the communities we serve," noted Boer, while Muller asserted, "We are confident on the prospects of the merger, given the complementarity of our store networks, the opportunity to accelerate innovation for our customers and the 500 million-euro [US $548 million] run-rate synergy potential."