Ahold NV operating profit rose by double-digits during the second quarter, driven by a solid sales performance at its Ahold USA division.

Ahold NV, operating profit, Greg Jacobson, Ahold USA division, chief executive officer, John Rishton, Giant Food Stores, Carlisle, Penn., Giant-Carlisle, Stop & Shop Supermarket Co., Giant Food, Landover, Md., Giant-Landover,

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Ahold sales, operating profit up on strong U.S. performance

August 30th, 2010

AMSTERDAM – Ahold NV operating profit rose by double-digits during the second quarter, driven by a solid sales performance at its Ahold USA division.

"We continued to grow sales, volumes and market share in the Netherlands and the United States while delivering solid financial results," said chief executive officer John Rishton in a statement. "Market conditions remained challenging with high levels of competitive promotional activity. We are confident in our ability to continue to balance sales and margins while providing improved value to our customers."

Income from continuing operations rose 3.6% to 203 million euros ($253.7 million) on a 10.8% increase in net sales to 7.13 billion euros ($8.90 billion). At constant exchange rates, sales grew 4.4%.

Ahold USA now consists of Giant Food Stores based in Carlisle, Penn. (Giant-Carlisle); Stop & Shop Supermarket Co.; and Giant Food of Landover, Md. (Giant-Landover). The unit generated a 5.5% increase in net sales to $5.52 billion, largely due to the contribution of the former Ukrop’s Super Markets Inc. stores in the Richmond area (now rebannered as Martin’s and operated by Giant-Carlisle), as identical-store sales excluding gasoline edged up 0.5%, a sequential improvement over the 0.1% decline recorded in the first quarter and better than the 0.4% rise expected by analysts.

U.S. operating income, meanwhile, gained 8.9% to $270 million, while operating margin improved 15 basis points to 4.89% of sales. Operating income included losses of $20 million related to the Ukrop’s stores that were acquired in February; $9 million of reorganization and IT integration costs; and $6 million in restructuring and related charges. Those items were partially offset by a $20 million release of insurance provisions, $4 million in impairment reversals and a $6 million gain on the sale of assets.

The modest improvement in same-store sales of Ahold’s American supermarkets was nonetheless markedly better than the performance of some other major supermarket operators. Both Safeway Inc. and Supervalu Inc. recently reported negative same-store sales results for the second quarter, while Delhaize Group recently reported a 2.8% drop in sales of its U.S. chains and a 3.6% decrease in comparable-store sales, largely due to a weak performance at Salisbury, N.C.-based Food Lion.

"We are in a very strong position because of the repositioning activities that we have taken and the strength of our balance sheet, whereas others are in a more difficult position on both of those fronts," Rishton said during a conference call.