Ahold Delhaize saw strong growth in sales and diluted earnings per share during its first-quarter 2022, the Dutch retailer reported May 11.
Ahold said first-quarter group U.S. net sales were up nearly $12.9 billion, or 5.8%, compared with first-quarter 2021, which contained a 53rd week, as at-home trends continue to be sticking. U.S. net sales benefited from favorable foreign currency translation rates, last year's acquisition of stores from Southeastern Grocers, and higher fuel sales (13.6% at actual exchange rates). U.S. comparable sales excluding gasoline increased 3.3%.
The company said underlying operating margin in the U.S. was 4.4%, down 0.4 percentage points from the prior-year period driven by increased labor, distribution and energy costs, which were partially offset by higher pricing and cost savings initiatives. In the first quarter, online sales in the segment were up 4.6%. This builds on top of the significant 188.3% growth in the same quarter last year.
Ahold Delhaize banner Food Lion continued to lead brand performance, which has now delivered 38 consecutive quarters of positive sales growth.
"I am pleased to report a strong start to the year for Ahold Delhaize,” said Frans Muller, president and CEO of Ahold Delhaize. “In times like these, our strong global portfolio of local brands provides distinct competitive and societal advantages. This allows us to successfully navigate short-term market volatility and, at the same time, provide financial stability and operational bandwidth to focus on our long term growth agenda.”
Muller acknowledged in a statement the pressures of rising food prices and inflation impacting consumers. "We are working hard with suppliers to mitigate price increases where possible and ensuring that increases are realistic and necessary,” he said. “Moreover, Ahold Delhaize’s local brands are helping customers manage their shopping baskets efficiently, by providing great value offers spearheaded by omnichannel loyalty programs, prioritizing healthy food options through Guiding Stars- and Nutri-Score-linked promotions, and expanding the assortment and availability of high-quality lower-cost own-brand products and bulk offerings.”
In the U.S., Muller said in a statement that the Giant Co. doubled points earned on the purchase of all Guiding Stars-rated items and that Giant Food expanded its “More for You” value campaign with the introduction of a bulk item aisle, offering consumers savings on larger-sized products.
“In the U.S., own-brand penetration stands at approximately 30%, and our brands will continue to invest in and extend their own-brand presence and visibility throughout 2022,” Muller said in a statement.
Building on its environmental, social and governance (ESG) ambitions, Muller said the company continued to make progress in this area during the first quarter. “As we continue to support the transition to a healthy and sustainable food system, our U.S. brand Hannaford announced plans to be fully powered by renewable energy by 2024,” Muller said.
Looking at the company’s regional performance in more detail, in the U.S., Muller said, “We were able to grow comparable sales by 3.9%, excluding weather and calendar shifts, and maintained relatively stable underlying operating profit in U.S. dollars, as strong food-at-home demand and our cost savings initiatives enabled our brands to mitigate incremental cost pressures.”
When it comes to the outlook of the future, Ahold Delhaize's Group said in a statement that “higher than expected first-quarter earnings coupled with a more resilient consumer climate in the U.S. as well as a more favorable U.S. dollar and benefits from favorable insurance results from rising interest rates are forecast to more than offset the challenging economic backdrop in Europe. Based on the current macroeconomic outlook, we now expect underlying EPS to be comparable to 2021, compared to our previous guidance of a low- to mid-single-digits decline.”
Ahold Delhaize USA banner stores include Stop & Shop, Hannaford, Martin’s, Giant Food and Food Lion.