Dive Brief:

• Ahold Delhaize on Wednesday reported that its performance in the U.S. declined during the fourth quarter of 2023 compared with the same period a year earlier, with several key financial metrics falling into negative territory.
• Stateside, the grocery company’s net sales were down 1.5% year over year in Q4 at constant exchange rates, while same-store sales excluding gasoline declined 1.9%.
• Ahold Delhaize’s results were impacted during Q4 by factors including declining inflation and the company’s loss-making divestiture of e-grocer FreshDirect.

Dive Insight:

Ahold Delhaize’s performance in the fourth quarter capped a difficult year for the Dutch grocer in the United States, where it generates the majority of its revenue.

The grocer’s net U.S. sales sank to 13.8 billion euros ($14.8 billion) in Q4. Ahold Delhaize’s operating income tumbled 46.5% year over year during the period, to 437 million euros, and its operating margin moved down to 3.2%, down from 5.8% during Q4 of 2022.

Ahold Delhaize’s digital sales also weakened during the company’s latest quarter, dropping 1.9% to about 1 billion euros. The company said its divestiture of FreshDirect to rapid delivery firm Getir, which it announced in November and completed the following month, dragged down its online revenue during the quarter.

The grocer said its U.S. results in Q4 were brought down in part by the termination of emergency SNAP benefits last year, a move by the federal government that has had a substantial impact on the grocery industry.

Ahold Delhaize noted that Food Lion and Hannaford, which have now recorded positive sales growth for 45 and 10 consecutive quarters, respectively, were bright spots during the quarter. The company also said it posted robust pharmacy sales in Q4.

In a reflection of the breadth of the challenges Ahold Delhaize encountered last year, the supermarket operator’s U.S. same-store, digital and net sales have all lost momentum for at least four quarters in a row.

For all of 2023, the company generated net sales in the U.S. of 54.5 billion euros, up 1.8% year over year. Comparable-store sales moved up 2.3%, while online sales rose 5.1%, to 4.2 billion euros.

Ahold Delhaize said it lost 250 million euros on the sale of FreshDirect, which came less than three years after the grocery chain announced it was buying a majority stake in the New York City-based e-grocer. Ahold Delhaize anticipates that its net sales and online sales in the U.S. will be $600 million lower in 2024 than they otherwise would have been because the company no longer owns FreshDirect.

On the other hand, the transaction contributed modestly to the company’s margins, according to Ahold Delhaize President and CEO Frans Muller. The grocer plans to channel that improvement in margins to help fund investments in its U.S. stores and customer value propositions, Muller said.

“I am pleased to report a solid end to the year for Ahold Delhaize. The local brands in our strong international portfolio have been steadfast in creating value for customers by enhancing their highly personalized loyalty programs, increasing access to omnichannel offerings, and expanding their innovative own-brand assortments,” Muller said in a statement.