Dive Brief:

• Ahold Delhaize reported modest sales and comps growth thanks to a strong performance from stores in the Netherlands, as well as its Food Lion, Giant-Carlisle and Hannaford banners in the U.S., according to a company release. Net sales for the quarter were €15.8 billion ($19.7 billion), a 1.6% increase over the same period last year. Comp-store sales were up 0.6% at Ahold USA and up 1.5% for the company’s Delhaize America division.   
• The retailer said Food Lion’s “Easy, Fresh and Affordable” initiative, which launched last year and focuses on improved store layouts and assortment, has driven that company’s strong performance of late. Ahold Delhaize noted that its Giant-Carlisle division, meanwhile, has seen improving sales through its enhanced beer and wine selection.
• Online sales increased 23.2% in the fourth quarter, while online sales for 2017 hit €2.8 billion ($3.5 billion), according to the company.

Dive Insight:

This wasn’t a dazzling quarter for Ahold Delhaize. But it was yet another period of solid, incremental growth for the company a year and a half after its efficiency-driven formation through the merger of two grocery giants.

Ahold Delhaize has invested heavily in pricing and promotions to keep its U.S. banners competitive. It’s also making deeper investments in store remodels and other initiatives aimed at giving locations a new look. Case in point: Food Lion’s ongoing “Easy, Fresh and Affordable” campaig — which includes remodels focused on fresh products, improved store layouts and better customer service — has molded the banner into a stronger-than-expected player in numerous markets. Discounter Lidl, Ahold Delhaize pointed out last quarter, hasn't made an impact on Food Lion’s sales.  

The company’s Giant-Carlisle banner, meanwhile, has gotten a boost from new beer and wine departments being added to stores. Craft beer has seen strong growth for several years, and along with wine sales are seen as a way to boost margins and store traffic — particularly with millennial consumers.

Hannaford’s new private-label focused loyalty program and updated store models should continue to drive sales for that banner. However, overall questions remain as to how Ahold Delhaize will continue to fare in the face of intense industry competition, including pressure from discounters, Amazon and other online competitors.

Ahold Delhaize has a considerable asset in Peapod, its online grocery arm that operates in 24 markets along the East Coast and in the Midwest. But the service has been underperforming lately, with growth in the single digits last quarter. Online net sales for the fourth quarter rose 23.2%, though it was unclear what Peapod’s contribution was.

Ahold Delhaize executives said in November that the company plans to increase spending on e-commerce by 50% in 2018 — from €100 million ($116 million) to €150 million ($174 million). The retailer still expects to hit its goal of €3 billion ($3.5 billion) in e-commerce sales worldwide this year and €5 billion ($5.8 billion) by 2020.