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Ahold Delhaize President and CEO Frans Muller said he believes inflation has “past its peak.” And as for second quarter results, the Dutch multinational retail and wholesale holding company appears to be in top form.
Group net sales were up 4.3% year-over-year and comparable sales excluding gas were up 3.6% in the U.S. Ahold operates the Stop & Shop, Giant, Food Lion, and Hannaford brands.
Muller said he sees more evidence that inflation is weakening but does see higher costs still impacting Ahold operations in terms of higher energy, commodity, transport, and labor costs. Still, Ahold was able to deliver consistent performance up and down the line in the second quarter.
Net consumer online sales improved 9.3% year-over-year in quarter two and the underlying operating margin was 4.1% with a modest decline in the U.S. Ecommerce penetration in the U.S. reached 8.1% during the first half of the year.
Ahold Delhaize said it now expects free cash flow in the range of $2.2 billion to $2.4 billion (EUR2 billion to EUR2.2 billion) and is holding onto its 2023 projections of an underlying operating margin greater than 4%, underlying EPS at around 2022 levels, and net capital expenditures of 2.5 billion Euros.
“Powered by growth in loyalty sales and increasing online penetration, we were able to more than compensate for the negative headwinds related to a reduction in the SNAP federal assistance program and moderating inflation rates [in the U.S.],” said Muller.
Muller pointed out that Food Lion and Hannaford continue to see strong market share gains as they further elevate their omnichannel capabilities.
Ahold’s online fulfillment capabilities continue to transition into same-day delivery models. Muller said the facility in Jersey City, N.J., will close in March 2024 but the company will still utilize its existing Stop & Shop network to serve customers.
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During his Q2 financial results call, Ahold Delhaize CEO Frans Muller declared that inflation is “past its peak.” However, inflation is still playing a factor in company operations due to continued high costs dealing with energy, transportation, etc. Is inflation finally on its way out?
Let us know in the comments below, or email your thoughts to the SN Staff at [email protected].
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