Fresh Direct acquisition helped boost online sales

ZAANDAM, the Netherlands — Ahold Delhaize showed continued growth against tough comparisons in the first quarter. Net sales were €18.3 billion ($22.1 billion), up 5.8% at constant exchange rates. Comparable sales excluding gas grew 1.7%, and were up 15.5% compared to 2019. Online sales were up 188.3%, driven in part by the acquisition of Fresh Direct.

“We are pleased with the underlying Q1 performance in both the U.S. and Europe,” Ahold Delhaize president and CEO Frans Muller said. ‘The two-year comparable sales stack sequentially accelerated in Q1 2021 versus Q4 2020 in both the U.S. and Europe, as we’ve been able to retain a strong level of underlying consumer demand by continuing to adapt to the enduring consumer behavior changes, including increased working from home, preference for healthy and fresh products, and higher online demand.

“Our brands were well positioned to satisfy the changing needs and preferences of their customers, many of which were trends already developing prior to COVID-19. As these trends accelerated during COVID-19, our brands have evolved more quickly to adapt. Growth in our leading local omnichannel platform also sequentially accelerated, with nearly 190% net consumer online sales growth in the U.S. and nearly 80% growth in Europe in the quarter, at constant exchange rates. Underlying operating margins were strong in the context of historical levels prior to COVID-19. While COVID-19 continues to create significant uncertainty in 2021, the outstanding Q1 results provide us with the confidence to raise our underlying EPS and Group net consumer online sales growth outlook for the year.”

The coronavirus pandemic continued to impact costs, hurting profitability. Ahold Delhaize posted a first-quarter net profit of €550 million euros ($668.3 million), compared with a restated €645 million for the year-earlier period. The company noted that it spent €150 million to support customers, associates and communities with COVID-19 relief care.

“As we pass the one-year mark of the COVID-19 pandemic, its effects continue to have an impact across our geographies,” Muller said. “In Q1, our brands, together with our suppliers, remained focused on fulfilling their vital role in society by maintaining food and product supplies to local communities. In addition, our U.S. brands have supported vaccination efforts. I remain thankful for the efforts of associates across all our stores, distribution centers and support offices during these challenging times. Our consistent focus on safety, while at the same time providing great customer service and community support, have helped drive a strong quarter relative to our expectations. Although COVID-19 continues to impact our results, we have now entered a period where our year-over-year growth rates are affected by the lapping of difficult prior-year comparisons.”

Muller noted that the company continues to bolster its online shopping capabilities.

“Investing in our business in order to solidify our position as an industry-leading local omnichannel retailer in 2021 and beyond remains a key priority,” he said. “We continued to build upon several important initiatives to increase our share of the consumer wallet and improve online capabilities, including increasing our online capacity, driven in part by our recently opened U.S. click-and-collect locations; moving forward with the launch of Ship2Me in the U.S., an “endless aisle” offering of over 100,000 general merchandise and food items, in the second half of the year; and rolling out the no-fee home delivery service AH Compact to additional markets in the Netherlands. With increased capacity and strong momentum, we now expect Group net consumer online sales to grow by over 40% in 2021 versus 30% previously. This includes the raised expectations for over 70% growth in U.S. online sales, versus over 60% growth previously, and at least €5.5 billion in net consumer online sales at bol.com, versus at least €5 billion previously.

“We also continue to make progress in elevating our Health and Sustainability strategy, and recently announced a new goal for all of our brands to achieve net-zero carbon emissions by 2050. In March, Albert Heijn was voted by consumers as the Netherlands’ most sustainable supermarket chain in the Sustainable Brand Index 2021 ranking for the fifth consecutive year. The GIANT Company in the U.S. announced a new partnership with the Rodale Institute in February to develop solutions for the regenerative organic agriculture movement. We also successfully priced our inaugural sustainability-linked bond in March, amounting to €600 million with a term of nine years, linked to achieving targets in reducing food waste and scope 1 and 2 carbon emissions by 2025.”