Dive Brief:
- Ahold Delhaize reported mixed sales results for its U.S. retail stores in a trading statement released Thursday. Ahold USA, whose stores include two divisions of Stop & Shop and Giant stores, saw comparable store sales decline slightly and market share increase, while Delhaize America, whose stores include Food Lion and Hannaford, saw comparable store sales rise 2.2% and strong volume growth.
- Food price deflation took a toll, as it has on much of the industry over the past year, with deflation rates for the quarter at 1.2% for Ahold USA and 1.7% for Ahold Delhaize.
- Overall, Ahold Delhaize’s sales rose on strong international performance. The company also noted a strong performance from Stop & Shop New England stores during the holiday season.
Dive Insight:
Although these results are less than ideal for Ahold Delhaize’s U.S. operations, they won’t cause the company or its investors to lose much sleep. Food price deflation has taken a toll on the entire industry over the past year. In 2016, retailers endured an 11-month span of year-over-year sales declines that signaled the longest period of deflation since the 1950s. Prices of perishable goods, which most supermarkets trade on, have been hit particularly hard.
Many analysts project prices to rebound this year, and Ahold Delhaize seems well positioned to capitalize when that happens. The company, which formed last year through the merger of Dutch Ahold and Belgium's Delhaize, expects to see major long-term cost savings through shared advertising, logistics and other efficiencies.
The company is also diversified across international boundaries, giving it added resiliency. While U.S. operations were a mixed bag for Ahold Delhaize, the retailer’s European divisions saw stellar results, with store and online sales in the Netherlands growing 6.6% across Q4.
At the same time, mainstream grocers like Shop & Stop and Food Lion face stiff competition from alternative formats. Recent years have seen club stores, dollar stores, natural and organic players, hard discounters and, of course, Wal-Mart, all cut into sales at traditional supermarkets. In the northeastern U.S., especially, Ahold USA’s stores have struggled to make significant gains.
