Ahold Delhaize Posts Slightly Lower Q4 U.S. Net Sales, Comps

For its fourth quarter of fiscal year 2023, retail conglomerate Ahold Delhaize reported group net sales of €23.0 billion (US $25.0 billion), up 1.9% at constant exchange rates and down 1.4% at actual exchange rates. Q4 comparable sales excluding gas rose by 1.8% for the group, with a decline of 1.0% in the United States and an increase of 6.5% in Europe. Net consumer online sales grew by 2.6% in Q4 at constant exchange rates, with double-digit increases at U.S. banners Food Lion and Hannaford and accelerating growth at Dutch retailer Albert Heijn partly offset by recently divested e-grocer FreshDirect. 

“The local brands in our strong international portfolio have been steadfast in creating value for customers by enhancing their highly personalized loyalty programs, increasing access to omnichannel offerings and expanding their innovative own-brand assortments,” noted Ahold Delhaize President and CEO Frans Muller. “In an increasingly complex world, our brands are able to deliver consistency to customers, associates and suppliers, quarter after quarter.”

Added Muller: “Disciplined cost management is more important than ever to mitigate cost increases for customers, especially as global conflicts create potential volatility in supply chains. In 2023, we left no stone unturned and significantly exceeded our original Save for Our Customers goals, generating over €1.25 billion [US $1.34 billion] in cost savings, which is 29% more than we generated in the prior year.”

In the United States, Ahold Delhaize’s net sales dipped by 1.5% at constant rates and comps declined by 1.0%, in line with company expectations, as inflation moderated further and Supplemental Nutrition Assistance Program (SNAP) headwinds remained. Against a declining U.S. grocery market, Food Lion managed to achieve 45 consecutive quarters of positive comparable-sales growth. Excluding one-offs, the U.S. underlying operating margin was consistent with the prior year, highlighting the company’s strong focus on managing costs to match top-line deflation trends. Further, the divestment of FreshDirect was finalized during the quarter, contributing a modest uplift to margin. For the coming quarters, this margin increase is expected to help fund investments in the U.S. brands’ store portfolio and customer value propositions.

Muller went on to note Ahold Delhaize’s health and sustainability efforts over the past fiscal year, including the reduction of greenhouse-gas emissions in its own operations by 35% compared with its 2018 baseline, the publication of a revised climate plan and an increase in the percentage of own-brand healthy food sales, reaching 54.8%, up 0.4 percentage points from 2022. 

“For 2024, we expect a predominantly consistent performance year-over-year, albeit with some different phasing across the quarters – as, for example, we lap the impacts of inflation rates, SNAP, and the various positive and negative impacts of the prior year’s transformational initiatives in Europe and the U.S.,” said Muller. “Our group underlying margin is expected to be at least 4%. Earnings per share are expected to be around 2023 levels and free cash flow at around €2.3 billion [US $2.5 billion]. And, as always, you can expect us to be laser-focused on cost control and cash flow delivery.”

He also noted that the divestment of FreshDirect is expected to reduce the amount of 2024 reported net sales and online sales for the U.S. segment by $600 million. A detailed outlook will appear in the Annual Report 2023, which will be published on Feb. 28.

Muller additionally revealed that the company would host its Strategy Day this coming May in its home country of the Netherlands, “at which we will talk about the many opportunities we see in front of us to kick off a new phase of momentum. Some of the themes we will outline include maintaining a relentless focus on the customer; leveraging the strength of our great local brands, including a more deliberate and holistic reset of Stop & Shop; simplifying our organization to sustain growth investments; and deploying capital in a more surgical way to support our biggest opportunities.”

Ahold Delhaize USA, a division of Zaandam, Netherlands-based Ahold Delhaize, operates more than 2,000 stores across 23 states and is No. 10 on The PG 100, Progressive Grocer’s 2023 list of the top food and consumables retailers in North America. PG also named the company one of its Retailers of the Century and among its 10 Most Sustainable Grocers.