Ahold Off to ‘Strong Start’ in Q1
In posting its first-quarter results for 2016, Ahold noted a “strong start” to its fiscal year, reflective of good performances across all of its markets. This included net sales of €11.8 billion (US $13.2 billion), which the Amsterdam-based retail conglomerate attributed to “solid store operations and a continued strong increase in online sales, improved profitability and a strong free cash flow.”
“We continue to deliver on our strategic objectives, with a good operational and financial performance in the first quarter,” said Ahold CEO Dick Boer. “Our focus remains on serving our customers and delivering on our Simplicity program, in order to invest in our great local brands to ensure that we provide even more value and innovation.”
Added Boer: “In the United States, we had a solid performance and continued to invest in our customer proposition, including the rollout of our new bakery departments. Peapod reported double-digit sales growth, further expanding its customer base in New York City” and introducing its own brand of fresh meal kits.
He also observed that the company was continuing to “make good progress on our proposed merger with Delhaize, which we expect to complete in mid-2016. Working together towards this common goal reaffirms our view that the merger will create a better and more innovative retailer, capable of delivering enhanced value for our customers, associates and shareholders.”
At Ahold USA, first-quarter net sales were €7,308 million (US $8.2 billion), up 4 percent, or 3 percent at constant exchange rates. Excluding gas, sales grew 4.1 percent at constant exchange rates.
According to the company, the addition of 25 former A&P stores in the New York metro market in the fourth quarter of 2015 “was the main contributor to the overall sales growth and resulted in an overall market share improvement in both dollars and volume. Identical-sales growth, excluding gas of 0.8 percent, was supported by further investments in our customer proposition. Our growth was adversely impacted by both the timing of the new year and fewer winter storms compared to last year. We continue to see no inflation in our U.S. markets, with retail price deflation in the meat and dairy categories.”
During the first quarter, Ahold USA continued to improve its produce, bakery and dairy departments while also broadening its natural and organic offering under the Nature Promise brand. Additionally, Ahold USA rolled out its latest round of price investments toward the end of the quarter, reducing prices on more than 1,000 items.
Ahold USA’s underlying operating margin was 4 percent, a 0.3 percentage-point increase from the year-ago period. Ahold said the improvement was mainly the result of the “strengthening of our Simplicity program, strong cost control, lower support costs and favorable utility costs.”