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VIP Program Hits Q1 Sales, Margins Stop & Shop/Giant Landover

The Netherlands-based Royal Ahold said its Albert Heijn chain delivered rosy results for the first quarter of 2008, (boosted in part by the sale of Ahold's majority interest in the Schuitema wholesale/retail operation to CVC Capital Partners), but its U.S. banners presented a mixed bag of results over the quarter.

"In the United States, the rollout of our Value Improvement Program at Stop & Shop/Giant-Landover remains on track," said Ahold c.e.o. John Rishton. "The price investments related to the rollout continue to impact margins and sales, with improvements expected later in the year. Giant-Carlisle reported solid sales and margin growth and continues to gain share in a very competitive market. We continue to respond to the turbulent economic environment and its impact on consumer and competitor behavior. We are confident that the actions we are taking to bring value to our customers are the right ones."

At Stop & Shop/Giant-Landover, first-quarter sales of $5.1 billion were up 1.3 percent over last year. Sales included $56 million of sales to Tops. Before its divestment, such sales were recorded as intercompany sales. Identical-store sales increased 1.2 percent at Stop & Shop (0.2 percent excluding gas sales) and decreased 1.5 percent at Giant-Landover (1.6 percent excluding gasoline sales), affected by lower pharmacy sales. Operating income came to $202 million (or 3.9 percent of sales), a decline of $26 million from the year-ago period.

Meanwhile, Giant-Carlisle's first-quarter sales were $1.4 billion, a 9.2 percent increase from last year. Identical sales grew 5.7 percent (3.7 percent excluding gasoline sales). Operating income was $72 million (or 5.1 percent of sales), a rise of $10 million compared with last year.

Total company sales for the first quarter of 2008 were 7.5 billion euros, down 1.3 percent from the same period last year. However, at constant exchange rates, sales grew 6.8 percent, the international grocer said in an interim financial report released Friday.

Operating income was 336 million euros, 23 million euros higher than in the same period last year, according to the Amsterdam-based retail conglomerate. Retail operating income was 370 million euros, an operating margin of 4.9 percent, vs. 4.8 percent in the year-ago period.

Income from continuing operations was 221 million euros, 65 million euros more than the same period last year. Net income was 261 million euros, an increase of 20 million euros compared with the same quarter last year, which still included income from U.S. Foodservice.
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