Ahold Posts ‘Modest’ Q3 U.S. Sales Growth

In its third-quarter interim report, Amsterdam-based retail conglomerate Ahold revealed sales of 7.6 billion euros (USD $9.7 billion), an increase of 3.7 percent at constant exchange rates; operating income of 289 million euros (USD $369.2 million), a 3.7 percent decline; and net income of 139 million euros (USD $177.6 million), a 45.9 percent plunge, including a 90 million-euro (USD $115-million) tax charge on the Swedish ICA retail chain. Ahold has a 60 percent holding in ICA, in regard to which it’s currently exploring strategic options.

“We continued to invest in competitiveness and gained market share in our major markets,” noted Ahold CEO Dick Boer. “Market conditions remained challenging, with consumers cautious in their spending and with ongoing high levels of promotional activity in both the United States and Europe.”

Added Boer: “Sales growth in the United States was modest, reflecting declining retail price inflation and a strong sales quarter last year. Through stringent cost control, we were able to deliver a solid margin performance.”

Among Ahold’s notable accomplishments during the quarter, Giant-Carlisle included the first full quarter of operations for 15 former Genuardi’s stores, and e-grocer subsidiary Peapod started piloting a pickup service in the Chicago area.

Ahold USA’s third-quarter net sales were $5.9 billion, a 1.9 percent increase. Identical sales were down 0.2 percent, (1.5 percent, excluding gasoline). Ahold attributed the drop to “ongoing challenging market conditions, strong sales growth in the third quarter of last year, and the impact of a decline in pharmacy sales due to the conversion of brand-name drugs to generic versions.” The company noted, however, that it was able to achieve market share gains in both the supermarket and all-outlets channel, as sales benefited from its aggressive promotional activities.

“We were able to largely offset the impact of both increased promotional activities, which are necessary in the current economic downturn, and cost inflation in wages, pensions and insurance,” the company added.

For the first three quarters, Ahold USA’s net sales were $19.7 billion, a 2.7 increase, while identical sales were up 1.2 percent (0.3 percent, excluding gasoline).

“We remain cautious in our outlook and expect market conditions to continue to be difficult,” Ahold said. “We will closely monitor the potential impact of rising food commodity costs, particularly in the United States. We are confident that we are well on track to execute our strategy and we will continue to invest in growth.”

In other Ahold news, a formal groundbreaking ceremony (left) took place Nov. 15 for Cathedral Commons, a mixed-use community in Washington, D.C., that will be anchored by a state-of-the-art 56,000-square-foot Giant Food store. In attendance at the event were local officials, including Mayor Vincent Gray, and Anthony Hucker, president of Giant Food LLC in Landover, Md., a division of Ahold USA.

The project is a joint venture between Greenbelt, Md.-based Bozzuto Development Co., Southside Investment Partners in Baltimore, and Giant Food, which has maintained a store at the location for more than 50 years.

Cathedral Commons is scheduled to be completed by fall 2014.