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Ahold Delhaize finishes fiscal 2021 on ‘strong note,’ CEO says
U.S. comp sales climb nearly 5% in Q4 atop double-digit gain a year ago
Russell Redman
February 16, 2022
5 Min Read
Food Lion turned in the top performance at Ahold Delhaize USA in Q4, notching its 37th consecutive quarter of comparable-sales growth.Food Lion
Global food retailer Ahold Delhaize tallied sales gains in both its U.S. and European food businesses for its fiscal 2021 fourth quarter and full year, building on a COVID-driven growth surge during fiscal 2020.
For the 13-week fourth quarter ended Jan. 2, net sales at Ahold Delhaize USA edged up 1.5% at constant exchange rates (5.9% actual) to $13.83 billion from $13.62 billion in the 14-week quarter a year earlier, Zaandam, Netherlands-based Ahold Delhaize said Wednesday. Comparable-store sales excluding gasoline rose 4.8% (5.7% including fuel sales).
Excluding the extra week from fiscal 2020, fourth-quarter 2021 U.S. net sales advanced 9.2% at constant exchange rates, Ahold Delhaize reported, adding that inclement weather negatively impacted comp sales by 0.2%. On a two-year stack, U.S. comp sales were up 16%. The U.S. underlying operating margin came in at 4.4% for the quarter, up 0.5 percentage points at constant exchange rates, aided by lower COVID-related costs and strong cost-savings initiatives, the company said.
"Our financial results in 2021 significantly exceeded our original expectations." — Frans Muller, Ahold Delhaize CEO (Photo courtesy of Ahold Delhaize)
Ahold Delhaize USA’s full-year 2021 sales totaled $53.7 billion, up 3.6% from $51.84 billion in 53-week fiscal 2020. U.S. comp sales for fiscal 2021 increased 2.6% overall and 1.9% excluding fuel. The gain came atop growth of 15.6% net sales and 13.3% in comp sales (14.4% excluding fuel) for fiscal 2020, including upticks of 18.7% in net sales and 10.3% in comp sales (11.2% excluding fuel) in the 2020 fourth quarter.
“We ended 2021 on a strong note with positive fourth quarter group comparable sales momentum and group margins in line with the prior strong year levels,” Ahold Delhaize President and CEO Frans Muller said in a conference call with analysts on Wednesday. “The good news is our financial results in 2021 significantly exceeded our original expectations, with positive full-year sales growth and stable 52-week underlying earnings on a comparable basis versus record results in 2020,” he noted.
The U.S. performance was led by Food Lion, which delivered its 37th straight quarter of comp sales growth, according to Ahold Delhaize, whose other U.S. supermarket brands include Stop & Shop, Giant Food, Giant/Martin’s and Hannaford as well as online grocer FreshDirect.
“The 71 stores [Food Lion] acquired by Southeastern Grocers in early 2021 also continue to exceed sales expectations,” Ahold Delhaize Chief Financial Officer Natalie Knight said in the call. “At Stop & Shop, we remodeled 19 stores in the fourth quarter, bringing the total remodels for 2021 to 55. Remodeled stores here also continue to exceed our sales expectations.”
Online sales for Ahold Delhaize USA surged 30.5% (constant currency) in the 2021 fourth quarter to $985 million from $755 million a year before, driven by the continued rollout of online grocery pickup sites and the FreshDirect acquisition, the retailer said. Excluding FreshDirect, U.S. online sales rose 7.5%, coming on top of a 128.5% jump in the 2020 quarter. Fiscal 2021 online sales for the U.S. totaled $3.81 billion, up 68.9% from fiscal 2020, which saw a 105.1% gain.
During the 2021 fourth quarter, the U.S. business rolled out another 59 click-and-collect locations, for 270 new sites added over the fiscal year, raising the total number to 1,386.
Helping spur Ahold Delhaize USA’s growth will be a continued transition to integrated self-distribution, including for stores and e-commerce. In 2021, the company hit its target of 65% self-managed center-store volume and aims to reach 85% in-house self-distribution by end of 2022. Looking further out, Ahold Delhaize USA Supply Chain, the company’s distribution and logistics arm, also plans to go live with two fully automated frozen distribution centers in early 2023 and to attain 100% integrated, self-distribution by 2024.
Ahold Delhaize now has nearly 1,400 U.S. online grocery pickup sites, after adding 270 in fiscal 2021, and more than 1,600 click-and-collect points globally.
Globally, Ahold Delhaize posted fiscal 2021 fourth-quarter sales of €20.15 billion ($17.63 billion), up 2.8% (0.1% at constant exchange rates) from €19.6 billion ($16.34 billion) a year earlier. Excluding the extra week, Q4 net sales were up 6.7% at constant exchange rate, the company said. Full-year 2021 sales grew 1.2% (3.3% at constant exchange rates) to €75.6 billion ($63.97 billion) from €74.74 billion ($65.55 billion).
Companywide, net consumer online sales increased 14.4% (13.2% at constant exchange rates) to about €2.98 billion ($2.61 billion) in the fourth quarter and by 37.3% (38.2% at constant rates) to €10.4 billion ($8.8 billion) for the 2021 fiscal year.
“Our investment in our omnichannel platform once again proved its worth during 2021,” Muller told analysts in the call. “With 15 million active mobile app users and 1,642 pickup points and click-and-collect locations globally, group net consumer online sales grew by more than 38% compared to 2020, representing a two-year stack growth of more than 105%. This positively impacted our 2021 group net sales.”
The planned €2.5 billion ($2.19 billion) in capital expenditures for 2022 will reflect the omnichannel focus, according to Knight. “We plan to shift close to 20 percentage points of our overall spend toward online and new, more omnichannel-focused stores in 2025 compared to where we were in 2020, as we complete several large supply-chain and other infrastructure projects,” she said.
Ahold Delhaize recorded fourth-quarter net income of €634 million, or €0.62 per diluted share (continuing operations), compared with a net loss of €9 million, or €0.01 per diluted share (continuing operations), a year ago. For fiscal 2021, net earnings came in at €2.25 billion, or €2.17 per diluted share (continuing operations), compared with €1.4 billion, or €1.30 per diluted share, in 2020.
At the fiscal 2021 year-end, Ahold Delhaize had 7,452 stores in the U.S., the Netherlands, Belgium and Central and Southeastern Europe, compared with 7,137 a year ago, for a net gain of 315. Ahold Delhaize USA closed out the year with 2,048 stores, a net increase of 78 from 1,970 in 2012, including 80 opened or acquired stores and two closed or sold stores.
