Ahold Delhaize Turns in Substantial Q3 Here and Abroad
For its third quarter, international retail conglomerate Ahold Delhaize has reported group net sales of €22.0 billion (US $23.6 billion), an increase of 1.0% at constant exchange rates and up 0.2% at actual exchange rates. Group net sales were driven by comparable-sales growth excluding gasoline of 1.4% and net store openings, with group net sales growth partly offset by the divestment of FreshDirect and lower gasoline sales. Q3 group comps excluding gasoline had a net positive impact of about 0.3 percentage point from weather and calendar, offset by a 1.2 percentage-point negative effect from the cessation of tobacco sales at supermarkets in the Netherlands.
In Q3, group online sales rose by 5.1% at constant exchange rates, driven by double-digit growth in online grocery, excluding FreshDirect. The divestment of FreshDirect had a negative impact of 7.3 percentage points.
U.S. net sales were €13.5 billion (US $14.5 billion), a dip of 0.1% at constant exchange rates and down 1.0% at actual exchange rates. U.S. comps excluding gasoline grew by 1.2%, driven by continued growth in pharmacy sales and benefiting from a net positive impact of about 0.5 percentage points due to calendar and weather, partly offset by a combined negative impact of 0.5 percentage points caused by the ramp-down of operations at 32 Stop & Shop stores slated for closure and the recall of Boar’s Head deli products. Net sales were adversely affected by the divestment of FreshDirect and lower gasoline sales. Food Lion and Hannaford continued to lead the U.S. brands’ performance, racking up 48 and 13 consecutive quarters of positive sales growth, respectively.
Q3 online sales in the United States declined 0.1% in constant currency, negatively affected by 15.4 percentage points due to the FreshDirect divestment. This was partly offset by double-digit online growth at Food Lion, Hannaford and The Giant Co.
“I am pleased to report a solid performance in the third quarter, placing us well on track to achieve our strategic objectives and underlying financial goals for the year,” noted Ahold Delhaize President and CEO Frans Muller. “As our brands operate in dynamic market environments, we are keeping a clear focus on elevating the customer value proposition, maintaining a sharp eye on cost levels and taking the right measures to step into our new Growing Together strategy, which is designed to drive consistent growth and long-term value creation.”
Added Mueller: “In the U.S., we continue to see momentum building, and I expect further improvements in trends through the holiday season.”
He also observed that improvements in technology and innovation had supported the company’s robust growth in online sales in both regions, driven by double-digit growth in online grocery sales, excluding the FreshDirect divestment. Over the past 12 months, Ahold Delhaize opened more than 70 new pick-from-store locations in the United States, and customers also responded positively to its partnership with DoorDash; resulting in triple the number of orders in Q3 compared with Q1.
During Q3, Ahold Delhaize also saw steady progress on existing initiatives and rolled out major new projects. Food Lion wrapped up its 167-store remodeling program in the Raleigh-Durham, N.C., market, bringing its parent company’s latest omnichannel concept to one of the brand’s biggest markets.
Buoyed by these results, Ahold Delhaize reiterated the company’s 2024 outlook of an expected underlying operating margin of 4.0% or higher, in line with the company’s historical profile. Underlying earnings per share (EPS) are expected to be at around 2023 levels at current exchange rates, and free cash flow is expected to be around €2.3 billion (US $2.5 billion). Net capital expenditures are expected to total around €2.2 billion (US $2.4 billion), lower than the prior year, mainly due to divestments of facilities in the United States. Ahold Delhaize asserted that it would “continue to maintain strong levels of investments into our brands’ store networks, the further rollout of omnichannel capabilities, and advancing our healthy and sustainable initiatives.”
Ahold Delhaize USA, a division of Zaandam, Netherlands-based Ahold Delhaize, is No. 11 on The PG 100, Progressive Grocer’s 2024 list of the top food and consumables retailers in North America. PG also named the company one of its Retailers of the Century and one of its 10 Most Sustainable Grocers.
