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Ahold Delhaize closes Peapod in Midwest

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QUINCY, Mass. — Ahold Delhaize USA this month shuttered its Peapod online grocery business in the Midwest and said the move would allow it to devote more resources to omnichannel operations in the East, where the company is the region’s largest grocery retailer through its Stop & Shop, Food Lion, GIANT/MARTINS, Hannaford and Giant Food chains.

Peapod’s online-only Midwest operation was hobbled by the absence of a network of supermarkets with a direct connection to the supply chain, company officials said.

Netherlands-based parent Ahold Delhaize this month cited growth in U.S. e-commerce sales in reporting strong financial results for fiscal 2019.

Cessation of Peapod deliveries in Illinois, Wisconsin and Indiana means the loss of 500 jobs, mostly related to the closures of distribution centers and a food preparation operation, the company said. Chicago-based Peapod was fulfilling about 10,500 orders a week. Ahold Delhaize acquired the online grocer in 2000.

“This was a difficult decision, given Peapod’s rich history in the Midwest,” Ahold Delhaize USA chief executive officer Kevin Holt said in a statement.

Chicago will remain the headquarters for Peapod Digital Labs, which employs 450 people engaged in developing and applying digital technologies to Ahold Delhaize’s e-commerce and brick-and-mortar operations.

Ahold Delhaize is one of the world’s largest food retailers, with grocery operations in the Netherlands, the United States, Belgium, Luxembourg and Central and Southeast Europe. The United States accounts for about two-thirds of its sales.

Ahold Delhaize said online sales grew 30.1% in its fourth quarter and 28.6% in fiscal 2019 at constant exchange rates. U.S. online sales increased 42.7% in the fourth quarter, and U.S. comparable-store sales, excluding gasoline, were up 2.3%.

“We ended the year on a high note, with strong group performance in the fourth quarter,” said Ahold Delhaize president and chief executive officer Frans Muller. Muller said the company exceeded its full-year guidance for per-share earnings and free cash flow, despite significant increases in capital spending to drive long-term growth.

“Performance at Food Lion and Hannaford was particularly strong,” Muller said. “While Stop & Shop’s comparable sales, excluding gasoline, improved over the last quarter, they remained slightly negative due to a challenging sales environment. That said, our Reimagine Stop & Shop program continues to build momentum, with sales in Long Island, and now Hartford, Conn., performing in line with our expectations. In 2020, we expect to remodel another 65 Stop & Shop stores.”

Ahold Delhaize is also reaping the benefits of its omnichannel investments, including the ongoing rollout of grocery pickup locations, Muller said.

“Peapod Digital Labs, which is our digital and e-commerce innovation center, will continue to provide solutions for our U.S. East Coast business,” Muller told analysts. “The omnichannel brands and technologies will continue to drive our growth on the East Coast.”


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