Ahold Net Profit Up, US Remains Resilient
August 26 2010 - 12:51AM
Dow Jones News
Dutch retailer Koninklijke Ahold NV (AH.AE) Thursday continued
to grow sales in the U.S. in the second quarter at the expense of
rivals, as it reported a 3.1% rise in net profit on lower financial
expenses and boosted by currency effects, but refrained from giving
a full-year outlook.
"We continued to grow sales, volumes and market share in the
Netherlands and the United States. Market conditions remained
challenging with high levels of promotional activity," Ahold's
Chief Executive John Rishton said.
Net profit rose 3.1% to EUR202 million from EUR196 million a
year ago, below analysts' estimates for net profit of EUR219
million. The figure was negatively impacted by a EUR47 million tax
claim at Swedish retailer ICA AB (SD-ICA), in which Ahold holds a
60% stake.
Sales rose 10.8% to EUR7.1 billion, helped by the consolidation
of the 25 stores that Ahold acquired late last year from U.S.-based
Ukrop's Super Markets Inc. for around $140 million, and a currency
effect. At constant currencies, sales were up 4.4%.
In the U.S., where Ahold generates over half of its revenue,
sales increased 5.5% to $5.5 billion with identical sales up
1.4%.
As in the first quarter, Ahold again outperformed its main U.S.
competitors: Wal-Mart Stores Inc. (WMT), the world's biggest
retailer, reported a 1.4% sales decline, Belgian peer Delhaize
Group (DELB.BT) a drop of 3.6% and Supervalu Inc. (SVU) a fall of
7.2%.
Supervalu Chief Executive Craig Herkert said the sales
environment was "extraordinarily competitive." Another struggling
competitor, Great Atlantic & Pacific Tea Co. (GAP), recently
reported a 7.2% drop in same-store-sales and said it needs to sell
assets and refinance.
Ahold is active on the U.S. East Coast through its
Stop&Shop, Giant-Carlisle and Giant-Landover brands. Last year,
it acquired 25 stores from Ukrop in Virginia and in April it bought
five Shaw's supermarkets in Connecticut from Supervalu.
U.S. consumers, still jittery about high unemployment, continue
to load their baskets with discounted items and lower-priced
private-label products.
Ahold's U.S. underlying operating margin was unchanged from last
year at 4.8%.
Its domestic operations, Albert Heijn, reported a 4.4% rise in
sales to EUR2.3 billion, helped by a football World Cup loyalty
promotion and the success of the Dutch team in reaching the final.
Stripping out store openings and closings, sales grew 3.5%.
The underlying operating margin was unchanged from last year at
6.8%. Earnings before interest and tax, or EBIT, rose 17.6% to
EUR347 million.
Ahold's shares closed EUR9.67 on Wednesday, gaining 4.4%
year-to-date.
Analysts have said Ahold could use its over EUR2.6 billion cash
pile for acquisitions or another share buyback.
-By Anna Marij van der Meulen; Dow Jones Newswires; +31 20 5715
216; annamarij.vandermeulen@dowjones.com
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