Ahold Posts Profit Gains in U.S.

AMSTERDAM — Ahold here said profits improved in its U.S. operations in the second quarter, but the company’s stock fell in the wake of a margin squeeze in Ahold’s Netherlands division.

Ahold USA, which includes the Stop & Shop, Giant-Landover and Giant-Carlisle chains, reported underlying operating income of $261 million for the second quarter, up 10.6% over year-ago levels. As previously reported, U.S. sales in the quarter were up 3.4%, to $6 billion, including an identical-store sales gain of 2.2%.

The operating margin in the U.S. was 4.3%, vs. 4.1% in the year-ago quarter. The company attributed the gain to “cost improvements, ongoing operational efficiencies and lower health and welfare costs.”

Read more: Ahold Completes Jumbo Buy

Through the first half of the year, Ahold’s U.S. division posted a 1% decline in operating income, to $581 million, compared with a year ago. Sales through the first half were up 3.1%, to $13.8 billion.

“We expect market conditions to remain difficult and are cautious about the potential impact of rising food commodity costs, particularly in the United States for the balance of the year,” Dick Boer, chief executive officer, Ahold, said in a statement.

Ahold also said it was “pleased” with the conversion of 15 Genuardi’s stores in the Philadelphia market to the Giant banner, which took place in the first three weeks in July, after the second quarter ended. The company said the conversion would account for “a few million” dollars in costs in the third quarter.

Read more: Giant Closes on Genuardi's Buy

Overall, Ahold said its net income, including results from its European businesses, was up 24.6% in the quarter, to about $312 million, on a 3.9% gain in sales, at constant exchange rates, to about $9.7 billion. The company said competitive conditions and a weaker-than-expected soccer tie-in its Albert Heijn chain in the Netherlands crimped profits in its headquarters country during the quarter.

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