Ahold hit by tough US market
European sale recovery for retail group
Ahold has seen sales improve in its core European retail operations, but its second quarter performance has been held back by a highly competitive US retail market.
The world’s third biggest retail group, still working to recover from the financial scandal that hit the business last year, reported a strongly improved net profit of €32m for the quarter, up mainly thanks to lower interest payments. However operating income was €169m, down 23.9 per cent.
In Europe, operating profits more than doubled to €67m from €32m a year ago. The results were helped by smaller losses in Central Europe and Spain as well as positive results from a price-cutting campaign in the Albert Heijn supermarket chain in the Netherlands, where customer traffic fell in the wake of Ahold’s much-publicised problems.
Operating results improved at the US Foodservice business, but disappointed in the US retail chains. Ahold President and CEO Anders Moberg said: “Many of our main operating companies showed improved performance against the same quarter of last year. The recovery of US Foodservice is well underway and we are pleased to show a positive operating income this quarter.
“In Europe, the ongoing repositioning of Albert Heijn is strengthening the company’s market leadership while cost reductions have led to higher operating income.
“Our results for US retail continue to be impacted by strong competition. We’ve also experienced pressure on operating expenses and incurred certain fixed asset impairment charges and costs associated with the integration of Giant-Landover and Stop & Shop into one business arena.
“This integration process, a part of our Road to Recovery program, is proceeding according to plan. As this huge task and other ongoing projects progress towards completion, we will begin to see the full impact on our competitive position.”
Plans to sell the Spanish retail operations and US supermarket chain Bi-Lo and Bruno’s remain on schedule for this year.
