Ahold Delhaize focuses on private label and cost savings in “challenging” market

Ahold Delhaize owes an increase in sales in the first quarter mainly to its American activities. In Europe, comparable sales were under pressure. Bol.com also lost sales, due to a difficult basis for comparison.

Saving costs

It was expected to be a difficult quarter for Ahold Delhaize, due to the difficulties to surpass the strong figures of the first quarter of 2021, when lockdown effects still played a role. All in all, the figures are better than expected: the supermarket group posted sales of 19.8 billion euros, up 8.3 % (3.6 % at constant exchange rates). Consumers continue to spend and price increases also play a role, the company says.

However, for comparable sales growth – only including stores that have been open for at least a year – there is a huge difference between the United States (+ 3.3 %) and Europe (- 3.1 %). In the US, inflation, energy prices and the war in Ukraine play a smaller role.

In the Benelux, and especially in Belgium, the market is “challenging”, CEO Frans Muller admits. The retailer is therefore rolling out successful price and loyalty programmes and is also going to cut costs more in order to be able to offer shoppers competitive prices. Private label products are being played out more prominently: in the Benelux, they represent more than half of sales. Dutch chain Albert Heijn was again an outperformer, gaining market share. Belgian Delhaize, however, lost market share as inflation hit the Belgian market hard.

Bol.com gains market share

Online sales also suffer from the normalisation of consumer behaviour. Although the penetration of online grocery shopping continues to rise, sales at bol.com fell by 7 % – again in comparison with a very strong first quarter a year ago. Moreover, according to Muller, the market has shrunk by 10 to 15% and bol.com has therefore gained market share. Muller is sticking to his plans to take the web shop to the stock exchange in the second half of the year.

Due to the difficult circumstances, the operating profit at Ahold Delhaize fell by 5.4%, in Europe even by 29.9%. The operating margin fell from 4.6% to 4.2%. Yet topman Muller sounds positive: “All in all, I am pleased with the performance of the business in what is an increasingly challenging environment. Overall, Q1 results were better than our expectations, despite macro-economic pressures arising from the war in Ukraine. The second quarter is seeing many of the trends from Q1 continuing. Therefore, taking all moving parts together, we expect underlying EPS to be comparable to 2021 with the rest of our full-year guidance metrics unchanged.”