Ahold Q2 Net Sales Edge Up

Ahold posted second-quarter 2013 net sales of 7.8 billion euros (U.S. $10.4 billion), up 1 percent from the year-ago period. At constant exchange rates, net sales grew 3 percent. During the quarter, Ahold USA sales increased 2 percent, measured in U.S. dollars.

CEO Dick Boer attributed this “modest” American sales growth to “an ongoing low level of inflation and volumes remaining under pressure in the food retail sector,” noting that the company’s U.S. chains were continuing to gain market share.

For the second quarter of 2013, net income was 206 million euros (U.S. $275.2 million), down 43 million euros (U.S. $57 million) from last year, which the Amsterdam-based retail conglomerate said reflected its sale of Swedish retailer ICA, which contributed 27 million euros (U.S. $36 million) to the year-ago period’s net sales.

For the half-year period of 2013, net sales were 17.9 billion euros (U.S. $24 billion), a 2.7 percent increase from last year. At constant exchange rates, net sales rose 3.8 percent. Half-year net income was 2,157 million euros, up 1,623 million euros (U.S. $2.7 billion) from the year-ago period. A result from discontinued operations of 1,751 million euros (U.S. $2.3 billion) related to ICA contributed to the increase, according to Ahold.

Added Boer, “The new leadership structure we announced this quarter, with an executive committee that represents Ahold’s business and functional leaders at the highest level, will simplify the company’s governance structure and decision-making process and will enable us to accelerate our ‘Reshaping Retail’ strategy.” The company reported continued progress on the strategy, which involves taking advantage of rapid changes in consumer behavior, shopping trends and the retail landscape.

“We remain focused on improving our competitive position through cost reductions and the overall simplification of our processes,” noted Boer. In fact, during the second quarter of 2013, the company made strong inroads with its cost reduction program, remaining on track to deliver on 600 million euros (U.S. $801 million) of savings, to be completed in 2014. Ahold made improvements to the areas of sourcing, productivity in store operations, and promotional effectiveness.

“In the current economic environment, we remain cautious in our outlook for the balance of the year, as we expect customers to be focused on value and volumes to remain under pressure,” said Boer.

For Ahold USA specifically, second-quarter net sales were $6.1 billion, up 2 percent from the year-ago period, with low levels of inflation. Identical sales growth was 0.5 percent (0.3 percent excluding gasoline), which Ahold attributed to improved promotional effectiveness, partially offset by the negative adverse of the federal sequester in the Washington D.C., area. Ahold USA operations gained market share in each quarter of 2013, although improved operational store efficiencies and better sourcing were offset by higher health and welfare costs as well as by investments in the further streamlining of operations.

Ahold USA’s first-half net sales were $14.2 billion, a 2.8 percent increase from last year, and identical sales rose 1.2 percent (1.2 percent excluding gas).