Ahold Delhaize faced 'tangible headwinds' in Q3

Ahold Delhaize on Wednesday reported “tangible headwinds” resulting in U.S. margins growing less than expected in the company's third fiscal quarter of 2023.

"Inflation, increasing interest rates and changes in U.S. government support remain tangible headwinds and are creating anxiety for many customers,” said Frans Muller, president and CEO of Ahold Delhaize, in a statement. “On its own, the reduction in SNAP benefits resulted in approximately a 4 percentage-point headwind to sales growth in the third quarter.”

U.S. highlights for the Dutch retailer included net sales of $14.5 billion, an increase of 0.5% at constant exchange rates—down 7.1% at actual exchange rates. Ahold Delhaize, the parent of grocers Food Lion and The Giant Co., reported U.S. same-store sales (excluding gas) increased by 0.9% in the company's third quarter, slipping from its second quarter results. Excluding the impact of weather and calendar shifts, U.S. same-store sales growth was 1.0%, partially offset by the end of emergency SNAP benefits and the moderation of inflation rates.

Online sales rose 4.4% in constant currency, driven primarily by double-digit growth at Food Lion and Hannaford. As the brands continue to invest in their omnichannel proposition, the company on Wednesday said it has entered into an agreement to sell its online grocery business FreshDirect to ultra-fast grocery delivery company Getir.

“Our biggest strength as a grocery retailer is the true omnichannel—combination of online and in-store—experience,” Muller said in a statement. “With this in mind, and the economics to deliver a sustainable long-term return on investment, we have decided to divest FreshDirect to Getir.”

Looking ahead, Ahold Delhaize said it now expects underlying EPS to be slightly below 2022 levels. The Dutch retailer previously said it was expected to be around 2022 levels.