Higher turnover, lower operational profit for Ahold | RetailDetail

Higher turnover, lower operational profit for Ahold

Higher turnover, lower operational profit for Ahold

Thanks to increased turnover in the Netherlands (its home territory), Belgium and the United States, Dutch supermarket group Ahold has had a good third quarter.

"Strong turnover growth" in Belgium

Ahold's June-September period saw a 1.9 % turnover increase to 7.47 billion euro (1.5 % excluding exchange rates changes). The total of Dutch and Belgian activities represented a share of 2.6 billion euro and went up 1.4 %. Stores which have been around for more than a year saw turnover drop 1.1 %, but Ahold still says Belgium had "strong turnover growth".

 

20 "Albert Heijn to go" convenience stores have also been remodeled and have grown sales 10 %, while its online activities "have once again realized double-digit turnover growth".

 

Ahold's American activities also performed well: turnover grew 1.6 % to 4.5 billion euro, thanks to a "better customer proposition" in more than half of its American stores. "Ahold USA's market share was higher than last year, driven by the New England division, while our market share at Giant Landover remained under pressure." A strike at its competitor Market Basket helped the Dutch concern as well.

 

Bigger investments, more expensive resources

In the third quarter, underlying company profit reached 285 million euro, which is 5 % lower than the previous year, but still better than analyst expectations at 280 million euro. Net profit did grow 7.9 % to 178 million euro.

 

The underlying operational margin reached 4.9 % for its Belgian-Dutch activities, down from 5.3 % the previous quarter. Ahold attributes the drop to bigger investments in its internet shop, Bol.com. American margins remained level at 3.8 %, even though bigger store investments and more expensive meat resources impacted its yearly margin.

 

"This quarter we reported improved sales trends in the United States and the Netherlands while our margin was stable versus the prior quarter, excluding the impact of the SPAR acquisition", a satisfied CEO Dick Boer said.

 

"In the Czech Republic (with a 367 million euro net turnover), we are well underway with the integration of the SPAR business. We are pleased with the performance of the stores that have been converted to the Albert brand and expect to have all stores rebranded by the end of the first quarter next year", the company said.

 

"Signs of improvement in 2015"

Ahold expects the current price pressure in the Belgian and Dutch markets to persist for a while. "There is barely inflation or economic growth", Boer said, but he is optimistic nonetheless. "People see light at the end of the tunnel, but emotions are quite important in how the consumer perceives the economy."

 

Dick Boer feels the fourth quarter will be very much like the third quarter. "We expect that ongoing investments in our customer proposition and further development of our formats and assortment will continue to result in improving sales trends."

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