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Ahold-Delhaize Reports On Q3 Of Fiscal 2023

11/15/2023

On November 8th Ahold-Delhaize, with supermarket operations in the E.U. and the U.S. reported on Q3 ending September 30th.  Assuming Euro to the U.S. dollar, of $1.08 to  €1, the Group attained a net income of $601 million on net sales of $23,652 million with a diluted EPS of $0.44.  Corresponding figures for the third quarter of FY2022 comprised a net income of $532 million on net sales of $22,855 million.  The Group achieved an operating margin of 2.9 percent compared to 4.1 percent for the corresponding third quarter of 2022.

 

The U.S. segment attained net sales of $14,688 million, including online sales of $1,116 million.  The U.S. operations achieved an operating income of $432 million compared to $527 million in the third quarter of 2022.  Operating margin was 2.9 percent, down from 5.0 percent during the third quarter of 2022.  Comparable store sales growth was 3.1 percent, excluding gasoline for the Group, but 0.9 percent in the U.S. compared to 3.6 percent for the third quarter of 2022. The U.S. Segment posted a charge of $163 million on FreshDirect that was divested.

 

Ahold-Delhaize posted total assets of $54,162 million against long-term debt and lease obligations of $16,695 million.  The company operates 2,051 stores in the U.S. under the Food Lion, Stop & Shop, Hannaford, Giant and Pea Pod banners.  The E.U. operations comprise 5,575 stores including 1,130 specialty units.

 

The company provided FY 2022 guidance of a 4 percent minimum operating margin and low double-digit growth compared to 2021 with $2.5 billion for capital expenditures.

 

In commenting on results, Frans Muller, President and CEO, stated, “During these times of heightened human suffering around the world, I am proud of our associates for their hard work and unwavering commitment to supporting their local communities. Inflation, increasing interest rates and changes in U.S. government support remain tangible headwinds and are creating anxiety for many customers. Our great local brands have been agile in expanding their assortments with high-quality own-brand products at great prices and swift to pass on price reductions where possible. They continue to invest in and leverage the power of our digital capabilities to provide customers with meaningful, highly personalized discounts tailored to their needs and wallets.

 

In reference to U.S. Operations Muller stated,"As a result, customers continue to place their trust in our brands, which is clearly reflected in positive market share growth. With our strong portfolio of international brands, we grew comparable store sales by 3.1% in the third quarter. At a Group level, we delivered an underlying operating margin of 3.8% and diluted underlying EPS of €0.58. While both these metrics are lower year-over-year, around two thirds of the EPS decline is linked to insurance-related adjustments and an unfavorable foreign exchange rate.

“In the U.S., excluding the impact of weather and calendar shifts, comparable sales grew by 1.0%.


The reduction in emergency federal Supplemental Nutrition Assistance Program (SNAP) benefits, higher interest rates and the resumption of student loan repayments in October continue to weigh on customer sentiment. On its own, the reduction in SNAP benefits resulted in approximately a four percentage-point headwind to sales growth in the third quarter. While we were able to offset a large portion of this headwind through our strong value propositions and ongoing momentum in online sales, the dilutive impact of a changing sales mix and increasing shrink contributed to slightly lower-than-expected U.S. margins. With the help of measures we are putting in place through our Accelerate initiatives, in-store actions to reduce shrink and further volume support incentives from vendors, we expect this modest margin pressure to be transitory and pass in a couple of quarters.