Ahold Delhaize has demonstrated solid financial growth during its third quarter, with net sales reflecting a robust performance in various markets. The international retail conglomerate reported group net sales of €22.0 billion (approximately US $23.6 billion), marking an increase of 1.0% at constant exchange rates and 0.2% at actual rates. This growth was largely propelled by a comparable sales increase of 1.4% (excluding gasoline sales) and an expansion through net store openings.
However, it is essential to note that this positive trajectory faced some obstacles. The divestment of FreshDirect, along with lower gasoline sales, partially offset the overall growth. Ahold Delhaize’s Q3 metrics showcased a mixed picture, with a 0.3 percentage point positive impact from weather and calendar factors on comparable sales, contrasted by a 1.2 percentage point negative impact due to the cessation of tobacco sales in its Dutch supermarkets.
In the realm of online sales, Ahold Delhaize reported a notable increase of 5.1% in Q3 at constant exchange rates. This increase was primarily driven by a double-digit growth in online grocery sales, notwithstanding the loss incurred from FreshDirect’s divestment, which negatively impacted sales by 7.3 percentage points.
When examining the U.S. market specifically, net sales totaled €13.5 billion (about US $14.5 billion), indicating a slight decrease of 0.1% at constant exchange rates and 1.0% at actual rates. However, comparable sales in the U.S., excluding gasoline, exhibited a commendable growth of 1.2%. This growth was fostered by pharmacy sales and a small net positive impact from calendar and weather influences. Nevertheless, the performance was slightly hindered by the operational ramp-down of 32 Stop & Shop locations slated for closure and the recall of certain deli products.
Among the highlight achievements for Ahold Delhaize was the continuous positive performance among its U.S. brands. Food Lion and Hannaford reported impressive milestones, achieving 48 and 13 consecutive quarters of positive sales growth, respectively. This trend indicates a strong consumer preference for these brands and reinforces their positions in the competitive grocery landscape.
Despite these successes, online sales in the U.S. experienced a minor decline of 0.1% in constant currency. This decrease was heavily influenced by the loss of FreshDirect, which alone accounted for a negative impact of 15.4 percentage points. However, a silver lining emerged from Food Lion, Hannaford, and The Giant Co., as they reported double-digit growth in their online sales.
Frans Muller, President and CEO of Ahold Delhaize, expressed satisfaction with the company’s performance in Q3, stating that they are well-positioned to meet their strategic goals for the year. He emphasized the importance of enhancing customer value and maintaining a vigilant focus on cost management. As part of their new “Growing Together” strategy, the company aims to drive consistent growth and create long-term value.
Looking ahead, Muller predicts a sustained momentum in the U.S. market, particularly as the holiday season approaches. He attributed part of the company’s growth to technological advancements and innovations that have significantly contributed to the boost in online sales. Over the past year, Ahold Delhaize has opened over 70 new pick-from-store locations in the U.S. to enhance the customer shopping experience. Additionally, a partnership with DoorDash has yielded remarkable results—with tripled order volumes in Q3 compared to Q1.
Ahold Delhaize has not only focused on expanding its physical footprint but has also been working on enhancing its store environments. Food Lion recently completed a remodeling initiative for 167 stores within the Raleigh-Durham market, successfully implementing the company’s latest omnichannel retail concept.
Throughout this successful quarter, Ahold Delhaize reaffirmed its 2024 outlook, projecting an underlying operating margin of 4.0% or higher. The company expects its underlying earnings per share to remain consistent with 2023 levels at current exchange rates. Additionally, free cash flow is anticipated to reach approximately €2.3 billion (around US $2.5 billion), with net capital expenditures estimated at €2.2 billion (approximately US $2.4 billion), a reduction from the previous year due to divestment actions.
In summary, Ahold Delhaize is making significant strides in the retail sector, leveraging technological advancements, strategic brand positioning, and customer-centric initiatives. Their performance in Q3 serves as a testament to their resilience and adaptability in a demanding market.
Ahold Delhaize, with its notable standing as the 11th largest food and consumables retailer in North America according to Progressive Grocer, continues to earn accolades for sustainability and excellence in grocery retailing.
