Dive Brief:

• Ahold Delhaize’s net sales in the U.S. declined slightly during the first quarter of 2024 on a year-over-year basis, but the grocery company’s comparable-store sales growth returned to positive territory after turning negative in the final quarter of 2023, the retailer reported Wednesday.
• Digital sales across Ahold Delhaize’s U.S. banners sank by about 10% during Q1, primarily due to the company’s sale late last year of online grocer FreshDirect.
• Ahold Delhaize’s results during Q4 were impacted by lower inflation as well as the absence of COVID-19 pandemic-era government benefits that had helped boost sales in previous quarters.

Dive Insight:

Ahold Delhaize’s performance in its latest quarter was an improvement from the final quarter of 2023. But the supermarket operator’s U.S. results were still off significantly year over year, reflecting the steep challenges impacting the grocery industry as the energy it derived from the pandemic dissipates.

The Dutch grocer achieved same-store sales growth excluding gasoline in the U.S. of about 1% in the first quarter — a reversal from the 1.9% decline it reported for that metric during the previous quarter. Net sales for the U.S. dropped by more than half a percentage point during Q1 at constant exchange rates, to 13.3 billion euros ($14.3 billion), but operating income rose by almost 2%.

By comparison, Ahold Delhaize’s same-store sales and net sales were both up by about 6% in the first quarter of 2023, and operating income popped 12% during that period.

While Ahold Delhaize noted that its sale of FreshDirect held back its digital sales in Q1 and will remain a drag on the company’s results throughout 2024, it said double-digit e-commerce growth at Food Lion and Hannaford helped soften the impact of the e-grocer’s divestiture. In addition, Ahold Delhaize is benefiting from its shift toward more efficient online fulfillment methods like pickup, President and CEO Frans Muller said in a statement.

Muller added that Ahold Delhaize is taking advantage of margin improvements in its European operations to support efforts to hold the line on prices in the U.S., particularly in areas where lower inflation and the reduction in SNAP benefits have hit it the most.

“These improvements ensure we can maintain overall consistent margins at a Group level, while, at the same time, allowing us more flexibility to invest in our customer value propositions in the U.S.,” Muller said.

Ahold Delhaize added that Food Lion continued to lead performance among its U.S. banners, as the chain notched sales growth for the 46th straight quarter.