Key facts
- Ahold Delhaize reported second-quarter earnings exceeding market expectations.
- Cost-cutting measures and market share gains were primary drivers of the better-than-expected results.
- The company's underlying operating income was €906 million, with a margin of 3.9%.
- Ahold reiterated its full-year financial guidance.
- U.S. sales saw a 1.4% growth, though impacted by reduced SNAP benefits and pharmacy pricing changes.
Supermarket group Ahold Delhaize, which owns chains including Food Lion and Albert Heijn, reported second-quarter earnings that surpassed market expectations. The company attributed its performance to successful cost-cutting initiatives and gains in market share, which helped to mitigate the impact of increased energy and transportation expenses and a cautious consumer spending environment.
CEO Frans Muller stated that customers are increasingly focused on value and promotional pricing. Despite a 0.3% decrease in underlying operating income to €906 million ($1.05 billion) at constant exchange rates, the company's margin of 3.9% exceeded the analyst consensus of €885 million and 3.8%. Muller acknowledged the margin was thin but competitive within the industry.
The Dutch group, which also operates U.S. chains like Stop & Shop and Giant, is adapting to volatile cost situations by conducting more frequent supply chain negotiations with vendors, moving beyond traditional annual talks. Analysts at Jefferies noted Ahold's resilience, particularly within the challenging U.S. market, which accounts for 60% of its total sales.
Ahold reiterated its full-year financial guidance. In the U.S., sales growth of 1.4% was tempered by a reduction in government SNAP benefits and changes in pharmacy pricing, collectively impacting growth by 1.6 percentage points. The company has previously announced a $1 billion investment plan through 2028 aimed at lowering prices in its U.S. stores to attract value-conscious consumers.