Loyalty, online sales growth give Ahold Delhaize a Q2 boost

Growth in loyalty and online sales helped Ahold Delhaize deliver a strong second quarter in the U.S., the Dutch retailer reported Wednesday.

Ahold Delhaize, the parent of grocers Food Lion and The Giant Co., reported U.S. same-store sales (excluding gas) increased by 3.6% in the company's second fiscal quarter of 2023.

Ahold Delhaize USA banner Food Lion led brand performance, delivering its 43rd consecutive quarter of positive sales growth. Food Lion operates more than 1,100 stores across 10 Southeastern and Mid-Atlantic states and, last month, the Ahold Delhaize USA banner upgraded 47 stores on the coast of North Carolina in a $77 million investment.

“In the second quarter, online sales in the segment were up 6.6% in constant currency, driven primarily by double-digit growth at Food Lion, which opened over 100 additional click-and-collect locations compared to the prior year,” Ahold Delhaize said in a statement.

U.S. highlights for the Dutch retailer included net sales of nearly $14.9 billion, an increase of 2.7% at constant exchange rates, or 0.3% at actual exchange rates.

U.S. same-store sales (excluding gas) increased by 4.0% during the period.

"In the U.S., second quarter comparable sales grew by 4.0%, excluding the impact of weather and calendar shifts,” Ahold Delhaize President and CEO Frans Muller said in a statement. “Powered by growth in loyalty sales and increasing online penetration, we were able to more than compensate for the negative headwinds related to a reduction in the SNAP federal assistance program and moderating inflation rates.”

E-commerce penetration in the U.S. reached 8.1% for the first half of the year.

“We also continue to take concrete actions to orient our online fulfillment capabilities toward same-day delivery models. In line with this, we will close a facility in Jersey City, New Jersey, effective March 2024, utilizing our existing Stop & Shop store network and partners to service customers in this catchment area going forward,’ Muller said in a statement.

Ahold Delhaize reiterated its 2023 outlook, noting that its underlying operating margin is expected to be around 4%. Looking ahead, the Dutch retailer is increasing its free cash flow guidance for 2023.

“We now expect free cash flow in a range from €2.0 billion to €2.2 billion [$2.1 billion to $2.4 billion],” Ahold Delhaize said in a statement.

Ahold Delhaize USA banner stores include Stop & Shop, Hannaford, Martin’s, Giant Food and Food Lion.