Ahold Delhaize is introducing a new strategic plan it said would grow sales and market share over the next three years, in part through stepping up investment toward the repositioning of Stop & Shop, its largest U.S. banner.
Details of the new strategy, dubbed Leading Together by the Dutch retailer’s CEO, Frans Muller, contemplates stepping up capital investment to about 3% of sales, with $100 million to $150 million in incremental cap-ex annually devoted to Stop & Shop. The 400-store chain recently piloted a repositioning in 21 stores around Hartford, Conn.
The company is providing additional details at presentations at its Capital Markets Day in New York.
“The merger and integration of Ahold and Delhaize Group have created a strong and efficient platform for growth, while maintaining strong business performance and building a culture of success. In an industry that’s undergoing rapid change, fueled by shifting customer behavior and preferences, we will focus on growth by investing in our stores, omnichannel offering and technological capabilities, which will enrich the customer experience and increase efficiencies,” Muller said in a statement. “Ultimately, this will drive growth by making everyday shopping easier, fresher and healthier for our customers.”
In the next three years, Ahold Delhaize said it expects to deliver comparable sales growth and market share gains as well as a doubling of net consumer online sales to about 7 billion euros (about $7.8 billion) by 2021. While investing in growth, the company will maintain a disciplined approach to capital investment and allocation, supported by a plan to reduce expenses by about $2 billion through its “Save for our Customers” program. Capital expenditure will be about 3% of annual sales during the coming three years.
“Our commitment is to self-fund the investments needed to drive growth, as our new cost savings program will allow us to maintain a stable group margin through 2019,” Muller said. “This will allow us to invest in our stores, omnichannel offering and technology, while we explore and seize new leadership opportunities in existing and adjacent markets.”
For 2019, Ahold Delhaize expects a stable group margin and high single-digit EPS growth, while buying back $1 billion (in euros) of its own shares. To fund investments in the repositioning of its largest U.S. brand, Stop & Shop and in the speed and coverage of its delivery and click and collect network, cap-ex is expected to be $2.25 billion.