Ahold Invests its Way to Q2 Gains

Ahold has released its interim report for the second quarter of 2012, during which the Amsterdam-based retail conglomerate logged a sales increase of 3.9 percent at constant exchange rates, an operating income rise of 18.5 percent, net income growth of 24.6 percent and an underlying operating margin on 4.3 percent. The company also completed the conversion of its 15 acquired Genuardi’s stores to the Giant banner.

“By investing in value for our customers, we were able to grow sales by 3.9 percent at constant exchange rates, and we gained market share in all our major markets in a challenging economic environment,” said Ahold CEO Dick Boer. “We saw ongoing high levels of promotional activity in both the United States and the Netherlands, with retail price inflation coming down, particularly in the United States. Our businesses in the United States achieved strong margins through stringent cost control.”

Added Boer: “We expect market conditions to remain difficult and are cautious about the potential impact of rising food commodity costs, particularly in the United States, for the balance of the year. We are confident that we are well on track to deliver on our strategy, and we will continue to invest in growth.”

He further said that the retailer was “making progress” on its “Reshaping Retail” strategy, would continue to focus on boosting its competitive position via cost reductions and streamlining processes, and was on target to deliver on its cost savings program for the years 2012-2014.

“Ahold continues to invest in profitable growth and act when opportunities arise,” noted Boer, who also pointed out that the company’s online retail operations, both in the United States and the Netherlands, were still racking up double-digit sales growth.

Ahold USA's second-quarter net sales were $6.0 billion, a 3.4 percent increase, which the company deemed “a solid performance,” given “the challenging market conditions.” All Ahold USA divisions saw market share gains, with identical sales up 2.2 percent from last year as a result of the timing of the Easter holiday, and promotional activities across the banners. Underlying operating margin edged up to 4.3 percent, from 4.1 percent last year. The company attributed its U.S. arm’s strong margin performance to cost improvements, ongoing operational efficiencies, and lower health and welfare costs in the quarter.

For the first half of 2012, Ahold USA posted net sales $13.8 billion, a 3.1 percent rise, while identical sales increased 1.7 percent (1.0 percent excluding gas). Underlying operating margin was 4.2 percent, compared with 4.4 percent last year.