Ahold cuts losses despite Dutch sales dip
Supermarket giant sees recover on track
Ahold has dramatically reduced its losses, down from €2.1bn in 2002 to €1m in 2003, despite a decline in sales in its Dutch home market.
The company, which has been selling non-core businesses in the wake of an accounting scandal centred on its US Foodservice operation, confirmed that total sales for the year were €56.1bn, down by 10.6 per cent on 2002.
Ahold said competitive price pressure in both its US and European retail operations, as well as exceptional items related to the sale of several companies, hit profits. However sales in local currencies increased in all its retail operations, except Albert Heijn.
Ahold has previously indicated that its well-publicised problems had hit consumer confidence in its home market. Net sales at Albert Heijn in 2003 declined by 1.7 per cent, with like-for-like sales down by 2.7 per cent, “primarily due to lower consumer spending and a negative market sentiment towards Albert Heijn.”
A price repositioning strategy launched in October 2003 saw the business regain market share in the fourth quarter. Elsewhere in Europe, sales increased in Central Europe and Spain as new stores opened.
In the US, total sales increased by 2.7 per cent in local currency, with strong performances by the Stop & Shop and Giant-Carlisle supermarket chains, despite increased activity by competitors.
For the year ahead, Ahold US retail sales growth is expected to be ‘modest’ in the face of continued competitive pressure, with the integration of the Stop & Shop and Giant-Landover chains expected to improve competitiveness and reduce costs.
Ahold expects sales in its Europe retail operations to increase in 2004 “in a generally tough environment with weak economies, consumer focus on price, and increased competition”.
