Ahold Delhaize has surprised analysts with stronger-than-expected quarterly growth figures. Albert Heijn and Delhaize are among the European frontrunners, thanks to successful campaigns regarding purchasing power (such as Delhaize’s Little Lions).
Safeguarding margins
In the third quarter of 2022, Ahold Delhaize has realised a 9.1 % increase in sales to 22.4 billion euros. That is much better than what analysts had expected. Sales have grown significantly in both Europe (+ 7.1 %) and the United States (+ 8.2 %). Operating profit also went up, by 2 % to 887 million euros. The retailer managed to maintain an operating margin of 4.4 %, which is very strong compared to its competitors – even though the margin is under pressure in Europe (at 3.41 %, compared to 4.95 % in the US).
Most of the group’s local brands are gaining market share, the retailer proudly reports. In fact, Food Lion has seen its comparable sales rise each quarter for ten consecutive years, which the press release calls “a remarkable achievement”. Albert Heijn was also mentioned favourably: the retailer continues to gain market share, thanks to a focus on providing value for customers in an increasingly challenging environment. The expansion of the ‘Price Favourites’ offer and the ‘100 products under 1 euro’ campaign proved successful, while loyalty programme ‘My Albert Heijn Premium’ now has more than 600,000 members.
‘Little Lions’ score
In Belgium, Delhaize sees an important improvement in comparable sales. The good results are partly the result of the successful ‘Little Lions’ purchasing power campaign. Since its launch in June, Delhaize has seen a 15 % increase in sales. That is why the retailer is adding an additional hundred products to the campaign. Optimising the SuperPlus loyalty programme is also paying off.
Meanwhile, the retail group’s e-commerce specialist bol.com saw its net sales increase by 5.6 %, thanks to double-digit growth of partners’ sales. On a year-on-year basis, the web shop is gaining 1 % market share.
“High inflation, rising interest rates, slowing economic growth and the war in Ukraine are putting heavy pressure on customers’ household budgets”, CEO Frans Muller painted a gloomy picture. However: “Although external factors such as energy prices are out of our control, we have continued to work diligently on issues that are in our control, and I am pleased that we are making good progress.” Ahold Delhaize is watching its costs more closely than ever, but the retailer is confident and is therefore raising its profit forecast for the full financial year. Earnings per share are now expected to grow by some 10 %.
