Belgian-Dutch retail group Ahold Delhaize did publish strong fourth quarter results, but its Belgian branch Delhaize failed to live up to expectations. The remodeled board will therefore propose a new strategy in the next few months.
Discounts weigh down margins
The group is doing well in the United States and the Netherlands, but Delhaize has not shown any sign of improvement. Fourth quarter turnover did grow slightly to 1.3 billion euro, but its company profit plummeted 56 % to 13 million euro. Its operational margins also shrank to 1.01 % following increased competition and the retailer’s impressive discounts. These were supposed to turn the tide, but mainly cost a lot of money. “Belgium experienced a difficult year, but I am happy that Delhaize is now developing a new strategy”, Dick Boer said.
Xavier Piesvaux and his team will announce that new strategy in the first half of 2018, but the aim is to stabilize its market share and to improve its profitability: it has to do better commercially, logistically and operationally. Albert Heijn CEO, Wouter Kolk, will supervize the changes. Expectations are that Delhaize will continue to alter its price perception, with marketing stunts like the “peanut weeks”, which are designed to help shoppers get through the end of the month thanks to products worth 99 cents.
Alongside the presentation of the financial results, Dick Boer also announced the retail group will continue to invest into the seamless shopping experience. Its US-based Stop & Shop already has a mobile Scan it & Go app which eliminates the need to wait in line at the cash register. In the Netherlands, Albert Heijn To Go announced its “Tap to Go” formula, which will allow customers to use their Bonus card to scan and pay for products with a simple tap on the electronic labels on the shelves. Both formulas will be rolled out throughout the year.
Dick Boer also referenced the strong online sales surge, including at Peapod and bol.com. Ahold Delhaize generated nearly 3 billion euros worth of sales online, which is a 21.8 % increase. 1.2 billion came from online food sales. The CEO is therefore committed to additional online investments.