ZAANDAM, Netherlands -- Ahold here said last week it is on track to achieve sales of nearly $61 billion by the end of 2001 -- a year ahead of its 1998 prediction that it would reach that goal by 2002.
Cees van der Hoeven, president and chief executive officer, said the company should be able to reach its sales goal this year excluding any acquisitions it might make. Ahold intends to continue to grow in part through acquisitions, he added, though he did not disclose any specific plans last week.
Van der Hoeven said the company also expects to increase earnings per share by 15% this year, excluding currency fluctuations, extraordinary items and goodwill amortization.
"The multi-channel strategy is taking shape, and we are on the right track to generate substantial benefits in and between the two channels -- food retailing and food service," Van der Hoeven said.
He noted that U.S. Foodservice, the Columbia, Md.-based company that Ahold acquired last April, "has already proven to be a major contributor [to financial results], exceeding our expectations.
"We feel good about our multi-channel, multi-brand, multi-format and multi-regional strategy. It looks complicated from the outside, but I can assure you it is very manageable and, in our perception, is the right way to attract customers wherever, whenever and whoever they are.
"We do not offer one-size-fits-all solutions but instead [offer] an array of meal occasions and meal solutions to very individual, unpredictable and ever-changing consumer needs. [That approach] also broadens our scope tremendously and puts us on an unabated growth path for the future."
Sales for the year rose 56% to $48.9 billion and net income increased 48.4% to $1 billion; while sales for the 12-week fourth quarter jumped 78% to $14.3 billion and earnings were up 46% to $345 million.
In the U.S., which accounts for approximately 55% of the company's total revenues, sales increased 36% to $27.8 billion for the year, with comparable store sales up 2.8% and operating earnings up 34% to $1.3 billion.
For the quarter, U.S. sales rose 54% to $7.6 billion and comps jumped 4.1%, while operating earnings increased 35% to $361 million.
The company said the sales spurt in the U.S. reflected, in large part, the U.S. Foodservice acquisition. However, it also noted that sales were higher at all retail operating companies, particularly at Stop & Shop and Giant Foods of Landover, Md.
During the second half of the year, Ahold converted 63 Edwards Super Food Stores in the New York area to the Stop & Shop banner and format; the company said all chains, excluding Edwards, showed market share gains, improved operating margins, significant synergy benefits and operating cost controls during the year.
It also noted that Peapod, the Chicago-based Internet grocer that Ahold acquired last spring, had operating losses of $32 million for the year and $22 million for the quarter.
In a talk with reporters last week to review financial results, van der Hoeven outlined Ahold's five-point plan for its existing businesses:
Stepping up organic sales growth, not only by expanding square footage but also by building additional sales per square foot by differentiating its assortments to meet local market needs and offering more customer services.
Improving margins through better joint sourcing of all product categories and by offering more value-added products and services.
Pursuing efforts to take costs out of the business, with all processes designed to improve customer satisfaction and/or associate motivation. "If an action does nothing or little to meet those guidelines, we will change the process or declare it redundant," van der Hoeven said.
