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Dutch retail group Ahold Delhaize has had a disappointing third quarter: a consequence of persistently high costs and low consumer confidence. Nevertheless, the retailer is on the path to recovery in Europe, CEO Frans Muller says.
Market share gain
While third-quarter sales fell 2.1 % to 21.9 billion euros, its operating margin fell to 3.8 %, mainly due to higher costs in the United States. In Europe, that margin was 3.5 %, in the US 4.2 %. Still, the retailer stresses that its market share is rising in key markets. Comparable sales growth was 3.1 % for the group: 0.9 % in the US and 7 % in Europe. Online sales increased 6.4 % thanks to double-digit growth at Food Lion and Hannaford and strong market share gains at Bol(.com).
In the US, lower emergency support, higher interest rates and the resumption of student loan repayments in October weighed on shopper sentiment, Muller explains. “When looking at Europe, which has endured more pressure in the last two years than the US, I am confident we are on the path to recovery.” Excluding the impact of Delhaize’s franchising plan in Belgium, comparable growth in Europe was 7.2 % and the margin exceeded prior year levels. Albert Heijn and Bol gained market share in the Netherlands.
Focus will shift
Muller points to three important moves the retailer has taken recently. The acquisition of Profi in Romania underlines Ahold Delhaize’s confidence in the Central and South European region. By joining procurement alliance Eurelec, the group will tackle persistent price differences between European markets. And a review of its online business in the US has led to the decision to sell delivery service FreshDirect to Getir. “Our biggest strength as a grocery retailer is the true omnichannel – combination of online and in-store – experience”, Muller said.
The CEO added that Ahold Delhaize is currently aligning priorities with the macroeconomic context and the competitive landscape. This will require some shifts in focus, he argues. The retailer promises more clarity on this at a Strategy Day in May 2024.
