Still at Helm, Boer Lauds ‘Great Shape’ for Ahold Delhaize

A lucrative combination of sales growth and merger synergy savings helped Ahold Delhaize end 2017 in “great shape” and prepared to improve in 2018, CEO Dick Boer said Wednesday.

While reviewing fourth-quarter and fiscal-year results in a conference call, Boer had a chuckle addressing rumors that a CEO succession could take place at the Dutch-based retailer this week.

“Nothing in the news today,” Boer replied when asked about the reports that Deputy CEO Frans Muller was slated to take over while Boer moved to a role with the retailer’s supervisory board. “I'm sitting here today serving our customers and associates with great pleasure."

Boer was clearly in a good mood sharing the story of comparable-store sales growth and improved margins despite price investments and stepped-up competition in the U.S., where Ahold Delhaize operates the Stop & Shop, Giant, Hannaford and Food Lion chains. Boer said the company intends to keep up the momentum in part by stepping up capital investment this year.

As previously reported, the trio of U.S. chains all grew sales and comps in the quarter, with Ahold USA brands Stop & Shop and Giant improving sales by 1.1% and comps by 0.6%, and Delhaize America’s Hannaford and Food Lion brands showing 1.4% sales growth and comps of 1.5%. Market share held steady at Ahold USA brands and improved at Delhaize America, the company added.

The now integrated units—whose combined sales totaled about $12.2 billion in the quarter and $47 billion for the year—will be reported as a single U.S. entity beginning this year.

Both U.S. units also expanded their operating margins in the quarter, with Ahold USA improving by 20 basis points to 4.2% and Delhaize America by 40 points to 4%. Boer was quick to point out that performance contrasted U.S. counterparts such as Walmart, where margins slid while food sales rose over a similar reporting period.

That was helped along by synergy savings in excess of targeted levels and a separate efficiency program that the company's execs refer to as Save for Our Customers, which invests savings into pricing and quality at stores. Boer also noted room for improvement in the shopping experience at Ahold’s U.S. stores.

Officials estimate the Ahold-Delhaize merger would produce about 500 million euros in savings by 2019. Roughly half of that total has already been realized, with the majority flowing to the bottom line.

Ahold Delhaize intends to increase capital spending from $2.2 billion to about $2.3 billion in 2018 with an eye on improving stores, online offerings and digital capabilities. Among the plans is a frictionless payment program to be known as Scan It and Go, which is set for a pilot launch at Stop & Shop beginning early this year, as well as further development of a small-store concept integrating the chain’s latest thinking on fresh presentation and store experience at the same banner.

E-commerce also had a strong year at Ahold Delhaize, with overall sales growth of 21.8%. Without providing figures directly, Boer said e-commerce accounting for slightly less than 2% of U.S. sales on the year and the “majority” of the company’s $1.7 billion in online food sales were recorded in the U.S., which would indicate that e-commerce is about a $1 billion business in the U.S.