Dive Brief:

• Ahold Delhaize on Wednesday reported robust financial results for the third quarter of 2022, with U.S. same-store sales up 8.2%, excluding gasoline, and net sales coming in at 14.7 billion euros ($14.8 billion), an 8.8% increase at constant exchange rates.
• The Dutch supermarket operator took an impairment charge of 187 million euros due in part to its decision in August to pare back operations of its FreshDirect e-grocery service, impacting its U.S. operating margin.
• Ahold Delhaize also said it has started seeing encouraging results at its long-underperforming Stop & Shop banner.

Dive Insight:

Ahold Delhaize has been dealing with weak performance for some time at Stop & Shop, but the retailer said investments it has been making in the Massachusetts-based unit have started to bear fruit.

The company’s $140 million effort to upgrade stores in the New York City area, which it announced in June, has led to sales growth driven by increased units and new customer transactions, President and CEO Frans Muller said in the earnings release. Stop & Shop has finished renovating five stores in the region, and “we are encouraged to see all stores trending ahead of plan,” he said.

This year, Stop & Shop has remodeled 31 of the more than 400 locations it operates in five states, pushing the proportion of its stores that it has refreshed since 2018 to over 40%, the company said in a presentation accompanying its earnings announcement.

Muller added that Stop & Shop’s Deal Lock savings program, which extends sales on certain national and private brand items for multiple weeks, has delivered strong results across the chain since the program’s introduction in late August.

Food Lion remains Ahold Delhaize’s best-performing U.S. banner, and has now recorded 40 consecutive quarters of positive sales growth, Ahold Delhaize said. Hannaford, meanwhile, has posted positive comp stores sales growth for 27 of the past 28 quarters, according to the company.

Ahold Delhaize recorded online sales growth of 20.8% in constant currency during Q3, which is down from the 52.9% digital sales growth it posted during the same period in 2021. The company added that Giant Food chain now has more than 1 million members in its Flexible Rewards loyalty program.

Ahold Delhaize also said it has raised its full-year earnings-per-share (EPS) guidance. The company now expects underlying EPS growth to be in the low double digits, up from the mid-single digits, which is a target “highly achievable in our opinion,” CFRA Research equity analyst Danny Yeo said in a research note.