Ahold Posts Higher Sales, Net Income in Q3

In its interim report for the third quarter of 2014, Ahold reported sales of 7.5 billion euros (US $9.4 billion), up 1.9 percent (1.5 percent at constant exchange rates) and net income of 178 million euros, an increase of 7.9 percent (8.5 percent at constant exchange rates).

"This quarter, we reported improved sales trends in the United States and the Netherlands, while our margin was stable versus the prior quarter, excluding the impact of the SPAR acquisition" of 49 stores for the company's Czech business, said Ahold CEO Dick Boer.

"In the United States, the rollout of our program to improve quality, service and value for our customers is progressing well," he noted. "By the end of this quarter, the program was active in over half of our stores."

Added Boer, "We expect that ongoing investments in our customer proposition and further development of our formats and assortment will continue to result in improving sales trends."

Stop & Shop Versus Market Basket

At Ahold USA, Q3 net sales were 4,501 million euros (US $5.6 billion), a 0.4 percent increase from last year. Identical-sales growth, excluding gas, was 1.2 percent, and included a sales increase that the Stop & Shop New England division effected by leveraging a business disruption at what Ahold termed "one of our main competitors" -- a veiled reference to Tewksbury, Mass.-based Market Basket, then experiencing the ultimately temporary ouster of its CEO, Arthur T. Demoulas. Even without this lift, Ahold said that the sales trend had improved for the segment.

Ahold USA’s market share rose from last year, spurred by Stop & Shop New England, while market share at Giant Landover remained under pressure.

Toward the end of the quarter, Ahold USA ramped up the rollout of its aforementioned program to improve the customer proposition, which includes enhancing stores' fresh and dry grocery offerings, deploying it in all 168 stores in the Giant Landover division. The program was implemented in 181 stores across Ahold USA in Q3, bringing the overall total to 501 locations.

The company's continuing focus on its own-brand products led to a higher penetration, by 60 basis points, to 37.8 percent. According to Ahold USA, its underlying operating margin of 3.8 percent was in line with the previous quarter. It attributed the fact that the operating margin was lower than last year because of the accelerated rollout of its refreshed stores, along with commodity price increases in meat that the company chose to partly absorb.

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