Dive Brief:
- Ahold Delhaize reported net sales of €15.5 billion ($16.6 billion) in Q4, a 2.8% increase over the same period last year, and adjusted for a 53rd week in 2015, according to a company release.
- Pro forma underlying operating margins increased 3.9%, boosted by strong sales at Delhaize America stores and in the Netherlands.
- "Delhaize America showed continued good performance at both Food Lion and Hannaford with strong volume growth, more than offsetting the impact of deflation on sales,” said Dick Boer, CEO of Ahold Delhaize.
Dive Insight:
Faced with price deflation and an increasingly competitive environment, Ahold Delhaize’s stores managed to deliver solid results. The strong performance of Delhaize America’s Hannaford and Food Lion stores, in particular, show that store investment is paying off for the company. Food Lion is in its third year of its “Easy, Fresh and Affordable” initiative that includes store remodels and a revamped pricing strategy.
The move highlights Ahold Delhaize’s broader goals outlined in its recently announced “Better Together” initiative, which aims to leverage the company’s size to drive more efficient performance from its various retailers. Overall, Ahold Delhaize is trying to waste fewer resources, invest in store brands and fresh capabilities, and fund promising new opportunities like small formats and e-commerce.
Given the multinational operating and reporting structure of Ahold Delhaize, it is difficult to compare its store performance to U.S. counterparts like Kroger, which broke a 13-year streak of same-store sales growth. The outlook for the company's U.S. stores, however, is more optimistic than Kroger's squeaking by.
Give the company credit for adapting, and for trying to make its traditional supermarkets work smartly and as efficiently as possible. However, it will need to continue evolving if it hopes to stave off discounters like Aldi, which is investing heavily in its own stores, and e-commerce players like Amazon.
