Food Lion and Hannaford continued to lead brand performance among Ahold Delhaize USA brands in Q2, with Food Lion delivering its 43rd consecutive quarter of positive sales growth.
Food retail conglomerate Ahold Delhaize reported second-quarter 2023 group net sales of €22.1 billion (USD $24.2 billion), up 4.3% at constant exchange rates and up 2.9% at actual exchange rates. According to the company, group net sales were driven by comparable-sales growth, excluding gasoline, of 4.6%, partly offset by lower gasoline sales. Strikes at Delhaize Belgium, and, to a lesser extent, weather and calendar shifts, had an adverse net impact on Q2 group comparable sales of approximately 0.7 percentage points.
In Q2, group net consumer online sales increased by 9.3% at constant exchange rates, which Ahold Delhaize attributed to solid growth at bol.com, which has now fully lapped COVID-19-related comparisons. Group online sales in grocery increased 6.2% at constant exchange rates.
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“The agility and flexibility that our brands and associates are showing, adjusting quickly to meet customers’ needs while at the same time diligently staying the course on our various transformation projects, underpinned the company’s strong performance this past quarter,” said Ahold Delhaize CEO Frans Muller. “All these efforts remain particularly important as the external environment continues to be dynamic. I am proud of the resilience our brands’ associates continue to demonstrate in the face of climate impacts.”
Added Muller: “On a positive note, we see more evidence that inflation has passed its peak. For customers, our great local brands have swiftly reflected price decreases, where possible.”
In the United States, Q2 net sales were €13.6 billion (USD $14.9 billion), an increase of 2.7% at constant exchange rates and up 0.3% at actual exchange rates. As Ahold Delhaize similarly noted in relation to its group net sales, U.S. net sales were driven by comparable-sales growth, excluding gasoline, of 3.6%, partly offset by lower gasoline sales. Excluding the impact of weather and calendar shifts, U.S. comp growth was 4.0%, partly offset by the end of emergency SNAP governmental benefits and the moderation of inflation rates. Food Lion and Hannaford continued to lead brand performance, with Food Lion delivering its 43rd consecutive quarter of positive sales growth.
In Q2, online sales in the United States were up 6.6% in constant currency, driven mainly by double-digit growth at Food Lion, which opened 100-plus additional click-and-collect locations compared to the prior year.
“Powered by growth in loyalty sales and increasing online penetration, we were able to more than compensate for the negative headwinds related to a reduction in the SNAP federal assistance program and moderating inflation rates,” observed Muller. “Food Lion and Hannaford, in particular, continue to see strong market share gains as both brands further elevate their omnichannel capabilities. In aggregate, e-commerce penetration in the U.S. reached 8.1% for the first half of the year. We also continue to take concrete actions to orient our online fulfillment capabilities toward same-day delivery models. In line with this, we will close a facility in Jersey City, N.J., effective March 2024, utilizing our existing Stop & Shop store network and partners to service customers in this catchment area going forward.”
The company went on to increase its free cash flow guidance for 2023, despite a dynamic external environment, to a range of €2.0 billion to €2.2 billion (USD $2.2 billion-USD $2.4 billion). It reiterated the rest of its 2023 full-year outlook, including an underlying operating margin of approximately 4.0%, underlying earnings per share at around 2022 levels; and net capital expenditures of about €2.5 billion (USD $2.7 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 2023 list of the top food and consumables retailers in North America. PG also named the company one of its Retailers of the Century and its 10 Most Sustainable Grocers.