Ahold Delhaize continued to grow fine last quarter, although strikes at Delhaize weighed on European sales and income. The Belgians (partly) caused a smaller operating margin.
Strikes cost European income
Inflation remains a challenge, insists CEO Frans Muller announcing the quarterly results. Still, Ahold Delhaize appears to have other headaches. The underlying operating margin clocked in at 4%, which was 20 basis points (0.02%) lower than a year ago. In the important US, however, there was strong profit growth.
Things faltered in Europe, where operating profit fell 21.2% to 202 million euros. Resigning CFO Natalie Knight refers to cost increases in Europe, especially energy prices, but also the strike at Delhaize. Ahold Delhaize is franchising its 128 self-owned Delhaize shops in Belgium, causing a lot of union protest. Excluding the impact of increased energy costs and the strikes, underlying operating margins would have been slightly higher than last year.
1.6 percentage points missed sales
Sales would also have been even higher without the strikes. Group revenue in the quarter rose 6.3% to 21.6 billion euros, a growth borne nicely by both the US (6.2%) and Europe (6.1%). Without the strikes in Belgium, however, European comparable sales would have risen 7.7%, Frans Muller admits. Analysts estimated missed sales at 100 million euros, Ahold Delhaize itself does not give exact figures.
Net online sales rose 5.9% in the quarter, again mainly thanks to the US (11.9%) where consumers are increasingly ordering their groceries online. In Europe, Ahold Delhaize sold 1.8 billion euro through e-commerce, a modest growth of 2.5%. Yet e-commerce is already bigger in Europe than in the States and there is one explanation for that: Bol.com.
Bol.com finds growth again
Since the Covid-driven boom, Bol.com has been in a bit of a slump, although the online department store is now snapping back up with some growth. The platform sold 1.3 billion euros worth of products last quarter, up 1.2% on last year and improving its growth rate compared to Q4 2022.
“Now that we are past the difficult COVID comparisons, we expect growth rates to improve significantly in the future,” the company says. Among other things, the platform is betting strongly on advertising (+13%) and logistics services to raise more revenue.
For the remainder of the year, Ahold Delhaize is sticking to its earlier forecast of stable earnings. The company is also sticking firmly to its plans to make all Delhaize supermarkets independent. Muller restated the plans, calling them “courageous”. Although it “takes a lot of courage and is disruptive in the short term, I am confident these measures will also ensure the long-term success of our brands, for the benefit of all our stakeholders.”
