Ahold Delhaize Q2: Will achieve online sales of €7bn in 2020, earlier than planned

Harriet Cohen
Senior Retail Analyst
@RetailAnalysis

Date : 05 August 2020

Ahold Delhaize has reported that its Q2 net sales increased by 15.9% at constant exchange rates to €19.1bn. Performance was largely driven by the COVID-19 pandemic. President and CEO Frans Muller said, ‘The engagement and strong execution of our teams have translated this unprecedented demand in both the U.S. and Europe, due to COVID-19, into outstanding results’.

Changing consumer behaviour will support 55%+ growth in online in 2020

‘We continue to adapt to the changes we are seeing in consumer shopping patterns and behaviour. One of these changes is the increased demand for our online offerings… We now expect over 55% growth in global net consumer online sales in 2020. This puts us on track to reach our goal of doubling global net consumer online sales from €3.5 billion in 2018 to €7 billion in 2020, one year earlier than we outlined at our November 2018 Capital Markets Day’.

US Q2 net sales: +18.7% to €11.9bn, online +126.8% to €512m, comparable growth +20.6%

In the US, Q2 net sales increased by 18.7% at constant exchange rates to €11.9bn, with online sales increasing by 126.8% to €512m. During Q2, Ahold Delhaize delivered comparable sales growth excluding gasoline of 20.6%.

US highlights: new 75%+ target for online, Food Lion as fastest growing brand, Stop & Shop outperformance

  • Strong online growth in Q2 has seen Ahold Delhaize double its target of 30%+ growth in online to 75%+
  • 8% increase in number of Click & Collect points to 765 as of the end of Q2. Targeting 1,100+ points by the end of the year
  • ‘Food Lion was our fastest growing brand and achieved its 31st consecutive quarter of positive comparable sales’
  • Acquisition of 62 stores from Southeastern Grocers. These will be converted to Food Lion
  • Re-imagined Stop & Shop stores saw continued outperformance, with 2020 refurbishments expected in the second half of the year.

    IGD Retail Analysis subscribers can access our exclusive insight presentation, ‘Five ways Ahold Delhaize is investing to drive growth at Stop & Shop’ here.

Europe Q2 net sales: +11.4% to €7.2bn, online +63% to €1.3bn, comparable growth +10.2%

In Europe, Q2 net sales increased by 11.4% at constant exchange rates to €7.2bn, with net consumer online sales increasing by 63.9% to €1.3bn. During Q2, Ahold Delhaize delivered comparable sales growth excluding gasoline of 10.2%

Europe highlights: market share gains in Netherlands and Belgium, online expansion across markets

  • Market share gains in the Netherlands and Belgium, maintained market share elsewhere
  • Growth in online delivery capacity at Albert Heijn through a new fulfilment center at Oosterhout. Capacity will be boosted further in Q3
  • Albert Heijn introduced home delivery in Belgium
  • ‘Greece and Romania to open their first home delivery fulfilment centres in the second half of 2020’

Progress through COVID crisis: health & safety, omnichannel & digital and stock availability

Ahold Delhaize outlined that large investments had been ‘made in health and safety measures, improving omnichannel & digital capabilities and in-stock levels’.

This included COVID-19 related costs of €330m including ‘additional safety measures, enhanced associate pay and benefits, and significant charitable donations to support local communities’. The retailer also hired an additional 45,000 associates in Q2.

As well as the omnichannel and digital advancements outlined above, Ahold Delhaize delivered a 40% capacity increase for online grocery at Albert Heijn, four new Stop & Shop Warehouses and the roll out of same day delivery to 600+ additional Stop & Shop and Food Lion stores.

The retailer also advised that stock levels were back to normal in Europe and is improving in the US, although there are industry-wide constraints in certain categories.

Outlook for 2020: accelerating digital and omnichannel investment despite uncertainty

‘Our Q2 performance illustrates the challenge all companies are facing in predicting results in the highly uncertain environment created by COVID-19. Despite the high levels of market uncertainty, we are accelerating investments to support our increasing digital and omnichannel ambitions and raising our 2020 outlook due to our strong performance in the first half of the year'.

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