Dive Brief:

• Ahold Delhaize on Wednesday reported solid financial results for the second quarter of 2023, as U.S. comparable-store sales excluding gasoline rose 3.6% year over year and stateside net sales increased 2.7%, to 13.6 billion euros ($14.9 billion).
• The Dutch grocer’s digital sales grew 6.6% in the United States during Q2, led by double-digit growth at Food Lion, which opened more than 100 new pickup points.
• Strong growth in e-commerce sales and sales related to loyalty programs helped Ahold Delhaize offset headwinds from cuts in SNAP benefits and decreasing inflation rates during the quarter, President and CEO Frans Muller said during an earnings call.

Dive Insight:

While Ahold Delhaize was able to generate increases in same-store and net sales during its latest quarter, the company’s financial performance during the period in the United States was less robust than the results it posted earlier in 2023 and last year.

U.S. comparable store sales during the period rose at their slowest pace since the first quarter of 2022, as the metric was down from 6.2% in Q1 and 9.4% during Q4, when inflation was more powerful. Sales growth has also lost steam, dropping to under 3% in Q2 from 5.7% in Q1 and 9.2% during the fourth quarter of last year.

Ahold Delhaize’s underlying operating margin in the U.S. slipped 0.1% year over year, to 4.6%, at constant exchange rates.

Muller said Food Lion and Hannaford have played key roles in propelling Ahold Delhaize’s U.S. business, with both chains posting “strong gains” in market share driven by omnichannel investments. Overall, the company saw e-commerce penetration hit 8.1% in the United States during the first half of 2023, according to Muller.

Muller added that Ahold Delhaize is continuing to take “concrete actions” to direct its online fulfillment capabilities toward same-day delivery. In connection with that strategy, the company has decided to shutter an e-commerce facility in Jersey City, New Jersey, when its lease expires next March, and will use Stop & Shop stores and partners to serve shoppers in that region instead, Muller added.

"The U.S. teams have taken a close look at the entire omnichannel operations with a view to achieve fully allocated e-commerce profitability by 2025," he said.

Food Lion posted an increase in comparable-store sales for the 43rd quarter in a row, Muller said. He also noted that house brands account for 35% of sales at Hannaford, which he said is the highest private label penetration among Ahold Delhaize’s U.S. banners.

Ahold Delhaize also continued to make progress during Q2 in revitalizing Stop & Shop, which has been a drag on its results in recent years. Muller said the chain has finished remodeling 17 of its 22 stores in New York City, with those locations recording growth in sales and household traffic that exceeded the company’s expectations.

“Embracing and driving transformational change in our operating model to set our company up for long-term success is one of the critical agendas we are driving this year,” Muller said during the earnings call. “Given our big transformation ambitions in new business models, in technology, in automation and in data, we’re committed to higher investments in tech capabilities to fuel growth.”