Ahold Delhaize H1: net sales +1.5% to €32.2bn

Jonathan Hawkins
Retail Analyst - Data
@RetailAnalysis

Date : 07 August 2019

Ahold Delhaize has reported its results for the first half of 2019, with net sales at constant exchange rates increasing by 1.5% to €32.2 bn (US$36.1 bn). Net income at constant exchange rates decreased by 9.1% to €769m (US$861.0m).

USA: net sales at constant exchange rates +0.7%, online +13.7%

In the USA, which accounts for around two thirds of the retailer’s business, net sales at constant exchange rates increased by 0.7% to €19.5 bn (US$21.8 bn). Online sales increased by 13.7% at constant exchange rates to €442m (US$494.7m).

Highlights: Food Lion volume, new processing facility and click and collect points

  • Food Lion reported its 27th consecutive quarter of positive comparable sales growth
  • The Re-imagine Stop & Shop program was rolled out on Long Island
  • Ahold Delhaize announced it will open a fresh food processing facility in Rhode Island in September 2019 that will initially serve the Hannaford and Stop & Shop brands
  • Peapod continues to grow, but Click & Collect is growing more quickly and now represents 20% of US online sales
  • 124 Click & Collect points were added in Q2 2019, bringing the total to 483. This is in line with Ahold Delhaize’s online growth ambition to have more than 600 by the end of 2019

Sales challenged by strikes at Stop & Shop

Sales in Q2 2019 were impacted by “the strike and subsequent recovery at Stop & Shop as well as the shift in the timing of Easter compared to last year”. The direct impact of the 11 days of the strike at Stop & Shop on net sales is estimated at €200m (US$224m).

Netherlands: net sales +3.8%, online sales +22.5%

Elsewhere, in the Netherlands, net sales in the first half increased by 3.8% to €7.2bn (US$8.1bn), while comparable sales grew by 3.3%. During this time, online sales increased by 22.5% to €1.1bn (US$1.2bn).

Q2 Highlights: Albert Heijn converts 50th store and growth on bol.com

  • Albert Heijn converted its 50th store with new fresh and digital concept. 120 stores are expected to be completed by the end of 2019
  • The operating margin at bol.com improved compared to last year. The online store added 3,000 new merchants and 1.3m new products

Belgium: net sales -1.1%, online sales +15.4%

Meanwhile in Belgium, net sales in the first half decreased by 1.1% to €2.5bn (US$2.8bn) and comparable sales decreased by 1.2%. In the same period, online sales increased by 15.4% to €28m (US$31.3m).

Ahold Delhaize said its proximity stores concepts, Proxy and Shop & Go, performed well and more openings are planned for H2 2019.

Central and Southern Europe: net sales +3.8%

Ahold Delhaize’s business in the Czech Republic, Greece, Romania and Serbia saw first half net sales at constant exchange rates increase by 3.8% to €3.03bn (US$3.39bn). Comparable sales also increased by 2.1% in the same period. In Q2 2019, the retailer opened 134 stores in Greece, Romania and Serbia.

The retailer reported high single-digit comparable sales growth for Q2 2019 in Romania and the Czech Republic. Ahold Delhaize said this was driven by successful store remodellings, including downsizings.

In Greece, sales improved compared to previous quarters but remains negative.

Results enable it to confirm 2019 outlook

Following the results, Ahold Delhaize said its H1 performance enabled it to confirm its 2019 targets of:

  • Realising €750m of gross synergies, which will see €512m in net synergies flowing from the merging of Ahold and Delhaize
  • Saving €540m in 2019 as part of the €1.8bn Save for Our Customers programme, which will run from 2019 to 2021
  • Free cash flow will be at around €1.8bn.

However, Ahold Delhaize expects its operating margin to be slightly lower in 2019 than 2018. It also expects earnings per share growth for the year to be in the low single digits, impacted by the strike.

CEO Muller: “no significant impact” from strikes expected in H2 2019

Commenting on the results, president and CEO, Franz Muller, said, “Although our results were impacted by the strike at Stop & Shop, our other U.S. brands continued their strong performance. As we continue to see sales performance improve at Stop & Shop, we expect no significant impact from the strike in the second half of the year.”