Ahold’s Q4, FY13 Affected by ‘Challenging Environment’

Ahold’s fourth-quarter 2013 results revealed that sales were 7.5 billion euros (US $10.3 billion), down 1.1 percent at constant exchange rates, while operating income of 311 million euros (US $426.5 million) was up 3.8 percent at constant exchange rates. For the full year, sales were 32.6 billion euros (US $44.7 billion), a 2 percent rise at constant exchange rates, with online net sales of more than 1 billion euros (US $1.4 billion), up 16.9 percent on an identical basis, and net income of 2.55 billion euros (US $3.5 billion).

“In a challenging environment, customers remained focused on value and were cautious in their spending, particularly in the second half of the year,” said Dick Boer, CEO of the Amsterdam-based retail conglomerate. “For the year, we … slightly increased market share in all our major markets. Supported by good progress on our cost savings program, underlying operating income remained almost flat at constant exchange rates.”

Boer noted that during 2013 the company “continued to implement our ‘Reshaping Retail’ strategy, leveraging changing consumer needs and pursuing growth opportunities in both existing and new markets. We also continued to rapidly expand our online businesses, achieving strong double-digit sales growth.” He added that Ahold would also keep transitioning “toward a more efficient capital structure.”

Slow Sandy Recovery

For Ahold USA, whose four regional divisions are Stop & Shop New England,  Stop & Shop New York Metro, Giant-Landover and Giant-Carlisle, fourth-quarter net sales were $6 billion, a 2.1 percent decline, while identical sales dropped 2.1 percent (2 percent, excluding gasoline) as a result of 2012’s Hurricane Sandy and a difficult sales climate. Underlying operating margin was 4 percent, compared with the year-ago period’s 4.3 percent, when Ahold received $26 million related to its portion of a litigation settlement with Visa and Mastercard. The company’s U.S. operations additionally reported strong progress with their “Simplicity” streamlining initiatives, both in sourcing and operations.

For the full year, net sales were $26.1 billion, up 1.1 percent and identical sales edged up 0.2 percent (0.3 percent, excluding gas). Underlying operating margin was 4.1 percent, versus 4.2 percent last year.

Ahold also noted that its U.S. businesses gained market share during the year, and had further improved their own-brand product line, which now accounts for 37 percent of sales, placing the banners “well on track to [their] target of 40 percent of total sales by 2016.”

“While we expect economic conditions to gradually improve, we remain cautious in our outlook for the food retail sector in 2014,” said Boer. “Our ongoing focus on expanding our online businesses is expected to continue to result in strong sales growth. We will continue to look for ways to simplify our business in order to reduce costs so that we can invest in our value proposition and offer customers a better shopping experience every day.”