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Ahold's First-quarter Sales Decline 11 Percent

ZAANDAM, The Netherlands - Ahold reported a larger than expected 11 percent decline in first-quarter sales as a result of divestments and the U.S. dollar's drop against the euro.

The world's third-largest food retailer, still reeling from an accounting scandal that broke in February last year, said preliminary and unaudited net sales dropped 11.3 percent to 15.4 billion euros ($18.23 billion) compared to the same period last year. Sales were also impacted by divestments, according to the company, which said net sales growth excluding currency impact and the impact of divestments was approximately 1.3 percent in the first quarter.

In the U.S., retail net sales decreased by 1.2 percent to $8.2 billion. The negative impact of the divestment of Golden Gallon in 2003 on net sales growth was approximately 1.5 percent. Same-store sales declined by 1.6 percent, and comparable sales declined by 1.0 percent in U.S. dollars.

Ahold said net sales in the first quarter were negatively impacted by the Easter calendar effect by approximately 0.8 percent and ongoing challenging market conditions. The bright spots among Ahold's stable of U.S. chains, Stop & Shop and Carlisle, Pa.-based Giant Food Stores, showed resilient performance, according to the company.

In Europe, Ahold said its net sales declined by 0.9 percent to $3.7 billion (euro), while net sales growth excluding currency impact amounted to 0.5 percent. Identical sales growth at Albert Heijn was 0.1 percent, while the increase in transactions was largely offset by a lower average basket size, according to the company. Further, net sales growth in Central Europe was largely offset by lower currency exchange rates. Net sales in Spain decreased as a consequence of intensified competition plus a lower store count.

Net sales at U.S. Foodservice increased in U.S. dollars by 4.6 percent to $5.5 billion, mainly driven by inflation, while its South America net sales amounted to $336 million (euro), down 42.4 percent from last year, mainly due to the divestment of Bompreco in Brazil in the course of the first quarter of 2004 and Santa Isabel in the second half of 2003.

In Asia, Ahold's net sales declined by 53.2 percent to $51 million (euro), a decline the company said resulted from the divestment of its operations in Malaysia and Indonesia in the course of the third quarter of 2003, and the divestment of its operations in Thailand during the first quarter of 2004.
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