At a time of rampant inflation, Ahold Delhaize redoubled its efforts to bring customers superior value, and its efforts were successful in its fourth quarter: The retail conglomerate reported group net sales were €23.4 billion, an 8.1% increase at constant exchange rates, and up 15.9% at actual exchange rates. According to the company, group net sales were driven by comparable sales growth excluding gasoline of 7.9%, and, to a lesser extent, by foreign currency translation benefits and higher gasoline sales. Q4 group comps benefited by about 0.4 percentage points from the net impact of calendar shifts and weather.
Also during the quarter, group net consumer online sales grew by 5.0% at constant exchange rates, led by a strong performance in the United States, which saw a 17.3% increase versus the prior year. Online sales in groceries rose 14.4% at constant exchange rates.
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“In Q4, we again rallied our organization around our core strengths – operational excellence, tight cost control and disciplined capital allocation,” noted Ahold Delhaize President and CEO Frans Muller. “This was critical to provide fuel for reinvesting in our customer value proposition to offset the impact of inflation wherever possible. To that end, we significantly exceeded our original Save for Our Customers goals in 2022, generating €979 million [USD $1.05 billion] in cost savings, which is over €100 million [USD $107.1 million] more than we had originally planned. I am proud of our associates across Ahold Delhaize and our local brands who left no stone unturned. As many of the same challenges persist and may even intensify in 2023, this formula will continue to play an important role as we look for further opportunities to improve our brands’ operations.”
In fact, to bolster the Save For Our Customers program and provide additional stimulus to key Leading Together strategic priorities, Ahold Delhaize has introduced the group-wide Accelerate initiative. “This initiative builds on our existing Leading Together efforts to create more agile organizations, to capture more scale and empower our people to take action to drive efficiency,” explained Muller. “In particular, we will continue to evaluate additional savings and efficiency levers to streamline organizational structures and processes, optimize go-to-market propositions, increase joint sourcing, and consolidate IT – with a clear priority to unlock resources to accelerate our Save for Our Customers program and focus investments on high-return projects. I am confident this proactive approach will make our organization stronger and ensure we can continue to deliver on our track record of driving consistent long-term value creation for all stakeholders.”
In the United States, net sales were €14.8 billion (USD $15.8 billion), a 9.2% increase at constant exchange rates, and up 22.2% at actual exchange rates. U.S. comps excluding gasoline grew by 9.3%, benefiting by about 0.5 percentage points from the net impact of weather and calendar shifts. Food Lion and Hannaford led brand performance, with each posting double-digit comps during the quarter. Q4 online sales in the United States were up 17.3% in constant currency, building on top of 30.5% constant currency growth in the year-ago period.
Muller attributed the U.S. comps growth to “strong holiday season activations. For example, the U.S. brands’ sales from loyalty programs and online orders reached all-time highs. This has been a trend we have seen building throughout the year, as our consistent investment in growing these capabilities continues to pay off. Our brands’ customer relationship management campaigns are a good example, now reaching around 30 million households and delivering over 10 billion personalized offers annually. We are also increasingly encouraged by the progress we see at Stop & Shop, where the brand's remodeled New York City stores are delivering double-digit sales growth and exceeding expectations. We plan to remodel a further eight stores in [New York City] in Q1 2023, and roll out key learnings to 40 other stores in the fleet throughout the year.”
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Muller also provided updates on Ahold Delhaize’s Healthy and Sustainable strategy, which included reductions in CO2 emissions of 32% compared with its 2018 baseline (30% in 2021) and tons of food waste per food sales of 33% against its 2016 baseline (20% in 2021). In November, the company issued updated interim CO2 emissions-reduction targets for the entire value chain (scope 3) to at least 37% by 2030. Ahold Delhaize also reconfirmed its commitment to become net zero in its own operations by 2040 and across the entire value chain by 2050, in line with the UN’s goal of maintaining global warming below 1.5°C.
Ahold Delhaize also released its 2023 outlook: an underlying operating margin of 4.0% or higher, underlying EPS at around 2022 levels, free cash flow of about €2.0 billion (USD $2.1 billion) and net capital expenditures of around €2.5 billion (USD $2.7 billion).
Ahold Delhaize USA, a division of Zaandam, Netherlands-based Ahold Delhaize that operates more than 2,000 stores across 23 states under the Food Lion, Giant Food, The Giant Co., Hannaford, and Stop & Shop brands, as well as e-grocer FreshDirect.
This story originally appeared on Progressive Grocer.