The retailer plans to test subscription services in U.S.
ZAANDAM, the Netherlands – Ahold Delhaize posted net sales of €17.8 billion (about $20.9 billion) in the third quarter. That is an increase of 6.8%, or 10.1% at constant exchange rates. Comparable sales growth (excluding gas) was up 12.4% in the United States and 7.5% in Europe, the company said Wednesday.
Net consumer online sales grew 62.6% at constant exchange rates; including 114.7% growth in the U.S.
“Our results reflected our ability to leverage our leading local digital and omnichannel platform, which generated nearly 115% net consumer online sales growth in the U.S. and nearly 50% growth in Europe in the quarter, at constant exchanges rates,” Ahold Delhaize president and CEO Frans Muller said. “While there remains a high level of uncertainty in the market, our strong year-to-date performance allows us to raise our 2020 underlying EPS outlook once again.
“We continue to adapt to changes we are seeing in consumer shopping patterns and behavior. Over the coming years, we will invest in our business to solidify our position as an industry-leading local omnichannel retailer and increase our share of the consumer wallet. We will find ways to improve our online productivity and are on track to achieve the €1.9 billion cumulative cost savings target by 2021. To benefit all of our stakeholders, we aim to strike the appropriate balance between investing in the health and safety of associates and customers, supporting our local communities, prioritizing environmental, social, and governance (ESG) initiatives, and returning capital to shareholders.”
As part of its plan to further strengthen its position, Ahold Delhaize plans to improve its omnichannel offerings and capabilities. For its U.S. businesses, efforts will include:
- Enhancing subscription offerings. The GIANT Co. will test a new subscription offer in the first quarter of 2021. It will feature an annual membership fee of less than $100 and will include “an improved value proposition and preferential delivery time slots,” driving increased loyalty and engagement.
- Offering an “endless aisle” solution with an additional 80,000 to 100,000 general merchandise and food items.
- Launching 1,500 to 2,000 more own-brand items in 2021, growing from the existing base of 15,000 items.
- Accelerating the Stop & Shop remodeling program, adding about 60 additional stores in 2021, up from 31 in 2020.
The company said its investments will be concentrated in three areas: strengthening its online capacity, supply chain and technological capabilities; improving its omnichannel offerings to consumers; and focusing on environmental, social, and corporate governance (ESG).
Ahold Delhaize also announced a new €1 billion share buyback program that is slated to start at the beginning of 2021.
Other revelations from the company’s third quarter fiscal report included:
- COVID-19-related costs were approximately €470 million year to date, and approximately €140 million in Q3, including safety measures and enhanced associate pay.
- Underlying operating margin was 4.6%, up 0.2% points from the prior year at constant exchange rates.
- Operating income was €207 million, impacted by the previously announced €577 million provision for a U.S. pension plan withdrawal.
- Diluted underlying EPS was €0.50, increasing 12.3%; diluted EPS was €0.06, unfavorably impacted by the provision for a U.S. pension plan withdrawal.
- The 2020 underlying EPS outlook was raised to growth in the high-20% range; the company continues to expect free cash flow to be at least €1.7 billion, net of a Q4 payment for a U.S. pension plan withdrawal, and capital expenditures of around €2.5 billion.