Ahold Delhaize: US and online push results upwards

Ahold Delhaize: US and online push results upwards

Dutch retail group Ahold Delhaize has posted robust third quarter results, doing better than analysts had expected. There was a slight growth in its home markets of Belgium and the Netherlands, and significant growths in the US and online.

 

Positive signals in Benelux

Ahold Delhaize posted sales of 16.7 billion euros in the third quarter, representing an increase of 5.8 % over the previous year and slightly more than the 16.5 billion that analysts had estimated. In the Netherlands, Albert Heijn achieved 3 % comparable revenue growth, while in Belgium, the group added 2 %. However, the retailer mainly owes the Belgian growth to calendar effects: without these, comparable sales would have fallen by 0.6 %. Delhaize saw its online sales increase by 17.2 % and its market share increase, but operating margin fell by 0.4 percentage points to 2.8 % as a result of the cost of logistics.

 

The company's Dutch market share remained stable, which actually is a positive development in comparison with the share loss seen in previous periods. Online growth was strong at 30.7 %, thanks to its online sales platform Bol.com (+ 34 %). However, the group does admit that Bol.com is still eating away at profits, since the operating margin without the online store would have been 6.4 %, but now stands at 5.6 %.

 

"Strong results"

In the United States, Ahold Delhaize achieved sales of more than 10 billion euros, which is a 1.8 % increase on a comparable basis – and all of this despite Hurricane Dorian. Online sales in the US grew by 26.3 %. CEO Frans Muller is confident that the retailer will be able to achieve a 20 % increase in online sales for the whole year.

 

The CEO is also keeping to his forecasts for the remainder of the financial year: a slightly lower margin than in 2018 and 1.8 billion euros in free cash flow. Analysts at Barclays have said that the results are strong: the only point to note is the free cash flow which, according to the analysts’ forecast, is still difficult to achieve. Also of note are the ailing results at the American Stop & Shop, for which a modernisation programme is underway.

 

Regarding Albert Heijn, Frans Muller says he is developing a "fully digital shop", where customers no longer have to scan or go through a check-out thanks to image recognition and sensors – in other words, comparable to Amazon Go. A test shop for consumers will open before the end of this year, after the success of a trial for employees only. The group also says it is experimenting further with contactless payments in the Benelux.