Loyalty programs were another source of strength

ZAANDAM, the Netherlands — Ahold Delhaize reported sales of €22.1 billion ($24.3 billion) for its fiscal second quarter, up 4.3% at constant exchange rates and up 2.9% at actual exchange rates, the company said Wednesday.

U.S. net sales were €13.6 billion ($14.9 billion), an increase of 2.7% at constant exchange rates and up 0.3% at actual exchange rates. The company said U.S. net sales were driven by comparable sales growth (excluding gasoline) of 3.6%, which was partially offset by lower gasoline sales. Excluding the impact of weather and calendar shifts, U.S. comparable sales growth was 4.0%, partially offset by the end of emergency SNAP governmental benefits and the moderation of inflation rates. The company’s Food Lion and Hannaford brands continue to lead the company’s performance in the United States, the company noted, adding that Food Lion delivered its 43rd consecutive quarter of positive sales growth.

Online sales in the U.S. segment were up 6.6% in constant currency, driven primarily by double-digit growth at Food Lion, which opened over 100 additional click-and-collect locations compared to the prior year.

“In the U.S., Q2 comparable sales grew by 4.0%, excluding the impact of weather and calendar shifts,” Ahold Delhaize president and CEO Franz Muller said in a statement. “Powered by growth in loyalty sales and increasing online penetration, we were able to more than compensate for the negative headwinds related to a reduction in the SNAP federal assistance program and moderating inflation rates. Food Lion and Hannaford, in particular, continue to see strong market share gains as both brands further elevate their omnichannel capabilities. In aggregate, e-commerce penetration in the U.S. reached 8.1% for the first half of the year.”

Muller noted that the company continues to work to gear its online fulfillment capabilities to support same-day delivery.

“In line with this, we will close a facility in Jersey City, N.J., effective March 2024, utilizing our existing Stop & Shop store network and partners to service customers in this catchment area going forward.”

The United States — where Ahold Delhaize operates the Stop & Shop, Giant, Food Lion and Hannaford chains — is Ahold Delhaize’s biggest market.

In Europe, the company reported net sales of €8.4 billion ($9.2 billion), an increase of 7.0% at constant exchange rates and 7.4% at actual exchange rates. Europe’s comparable sales increased by 6.3%.

On March 7, Ahold Delhaize’s Belgian brand, Delhaize, announced its intention to transform all of its integrated supermarkets in Belgium into independently operated Delhaize stores to strengthen its position in the country’s competitive retail market. Ahold Delhaize supports the intention to transform to one aligned operating model, which will allow the brand to better serve customers in the long term. By having all stores operated by local entrepreneurs in the future, Delhaize will have a better opportunity to respond to local conditions. Following the announcement, Delhaize Belgium has been impacted by strikes. Excluding the impact of strikes in Belgium, Europe’s comparable sales increased by 7.6%.

“A key highlight of the quarter was a very strong performance in online retail,” Muller said of the company’s results in Europe. “At bol.com, Gross Merchandise Value (GMV) grew by 10.5% to €1.4 billion. At Albert Heijn, we crossed the 800,000 mark for premium subscribers and continue to see improvements in e-commerce profitability. While underlying operating margin was down 0.2 percentage points at 3.2% in the quarter, excluding the impact of inflated energy costs and the effects on Delhaize Belgium from our operating model transformation, underlying operating margin exceeded prior year levels. When it comes to the initiative at Delhaize, I am confident the management team is on the right track and we expect the first fifteen stores will begin converting in October and November.”

Ahold Delhaize said it is increasing its free cash flow guidance for 2023 from €2 billion to between €2 billion to €2.2 billion. The rest of the company’s 2023 outlook, announced with its Q4 2022 results, remains the same. Underlying operating margin is expected to be at least 4.0%, in line with the company’s historical profile. Underlying EPS is expected to remain at around 2022 levels at current exchange rates. Net capital expenditures are expected to total around €2.5 billion, with increased investments in digital and online capabilities as well as healthy and sustainable initiatives focused on reducing our climate impact. Ahold Delhaize said it also remains committed to its dividend policy and share buyback program in 2023.