The solid sales performance of Ahold Delhaize’s U.S. banners in the retail conglomerate’s third quarter of 2017 led to increased market share across the brands.
Overall, Zaandam, Netherlands-based Ahold Delhaize grew sales to 2.1 percent and improved margins through strong synergy delivery. Net sales rose 7.4 percent to 15.1 billion euros (up 10.9 percent at constant exchange rates, while net income soared 54 percent to 362 million euros (up 59.5 percent at constant exchange rates). The company’s U.S. and European online businesses boosted total net consumer sales by more than 20 percent.
“We reported a strong financial performance again this quarter as margins increased significantly, driven by synergies while savings from our ‘save for our customers’ programs are continuously being reinvested in the business,” noted Ahold Delhaize CEO Dick Boer. “We continue to successfully implement our Better Together strategy and expect cumulative net synergies for the full year of 2017 to increase from 220 million euros to 250 million euros."
In the United States, the company noted that low-level inflation made a comeback during the quarter, and sales performance further improved. Food Lion continued to rack up strong volume growth, backed by the its ongoing Easy, Fresh & Affordable store refresh strategy, and Stop & Shop New England benefited from a successful summer holiday period.
As part of its omnichannel strategy, Ahold Delhaize pointed to its continuing investment in online warehouse capacity, and that it was poised to realize nearly 3 billion euros in online consumer sales this year, and close to 5 billion euros by 2020.
The company is also beefing its digital capabilities and expertise, and honing its ability to offer customers a personalized experience, both in stores and online, via data analytics to devise digital loyalty programs and unique offers and promotions. In fact, with the recent introduction of the My Hannaford Rewards program, all of Ahold Delhaize's U.S. banners now offer a digital customer loyalty program.
The company also noted investments to further enhance its own-brand product lines. This will include incorporating its Ahold USA and Delhaize America natural and organic private brands, with total annual sales of $1 billion, into the Nature’s Promise brand, which Ahold Delhaize plans to roll out across its other banners.
In 2018, Ahold Delhaize said it would “maintain [a] balanced approach between managing our debt, funding growth and returning excess liquidity to our shareholders.” It also expected to increase cap ex, “focused on improving our store network, expanding our omnichannel offering and further developing our digital capabilities.”