Ahold Delivers 'Solid' Q4

Ahold said this week that its fourth-quarter 2008 net sales were 6.6 billion euros (US $8.3 billion), an increase of 12.9 percent from the year-ago period. At constant exchange rates, net sales grew 5.9 percent. Operating income was 365 million euros (US $458 million), 120 million euros (US $150 million higher than last year. Retail operating income came to 392 million euros (US $492 million), a retail operating margin of 5.9 percent vs. 4.9 percent in the year-ago period. Net income was 285 million euros (US $357 million), up 23 million euros (US $29 million) compared with last year, reflecting a higher operating income, partly offset by lower income from discontinued operations and higher income taxes.

For the full year 2008, net sales were 25.7 billion euros (US $32.2 billion), up 3.3 percent vs. last year. At constant exchange rates, net sales increased 6.9 percent. Operating income was 1.2 billion euros (US $1.5 billion), 130 million euros (US $163 million) higher than the year-ago period. Retail operating income was 1.3 billion euros (US $1.6 billion), an underlying retail operating margin of 5.0 percent. Net income was 1.1 billion euros (US $2.0 billion), a decline of 1.9 billion euros (US $2.4 billion) vs. last year, which included a 2.0 billion-euro (US $2.5 billion) gain on divestments.

"In 2008, we delivered solid performance with particularly strong results in the last quarter and achieved an underlying retail operating margin of 5 percent for the full year," said CEO John Rishton. "We have achieved our annual targets for each of the last three years, thanks to the hard work and dedication of our employees. [W]e propose to increase our annual dividend for 2008 by 12 percent to 0.18 euros per common share."

Rishton attributed the retail conglomerate's strong performance to such factors as the completion of the Value Improvement Program at Stop & Shop and Giant-Landover, including the rebranding of the divisions, which "strengthened our relative price position and led to market share gains and improved financial results in the second half of the year." Additionally, Giant-Carlisle continued to do well, gaining considerable market share, he noted.

As a result of such activity, "[a]lthough the economic environment continues to deteriorate, we believe that the business is well prepared to respond to the effects of recession," observed Rishton. "We have a strong balance sheet and we have repositioned our businesses over recent years to give better value to our customers. We continue to improve our offer and reduce costs. As a business, we have the skills and capabilities to respond quickly and effectively to changes in consumer behavior. Despite the continued deterioration of the economic environment, in the first weeks of 2009 we have seen no significant changes in consumer behavior."

At Stop & Shop/Giant-Landover, fourth-quarter net sales of $ 4.0 billion rose 2.8 percent from the same period last year. Net sales included $15 million of sales to Tops (before its divestment, such sales counted as intercompany sales). Identical sales increased 2.3 percent at Stop & Shop (4.0 percent excluding gasoline net sales) and 1.1 percent at Giant-Landover (1.0 percent excluding gasoline net sales), in spite of lower pharmacy sales. Operating income was $ 207 million (or 5.1 percent of net sales), an increase of $84 million from the year-ago period.

For the full year, Stop & Shop/Giant Landover's net sales of $17.1 billion grew 2.4 percent vs. last year. Net sales included $114 million of sales to Tops. Identical sales rose 2.4 percent at Stop & Shop (2.1 percent excluding gasoline net sales) and fell 0.4 percent at Giant-Landover (0.5 percent excluding gasoline net sales), affected by lower pharmacy sales. Operating income was $701 million (or 4.1 percent of net sales), a rise of $39 million from last year.

At Giant-Carlisle, fourth-quarter net sales of $1.1 billion were up 7.9 percent compared with last year. Identical sales went up 4.6 percent (5.7 percent excluding gasoline net sales). Operating income totaled $60 million (or 5.4 percent of net sales), an increase of $12 million from the year-ago period.

Full-year Giant-Carlisle net sales were $ 4.7 billion, an increase of 10 percent compared to from last year. Identical sales increased 6.3 percent (4.7 percent excluding gasoline net sales). Operating income came to $ 233 million (or 4.9 percent of net sales), a rise of $20 million compared to last year.