AHOLD DELAYS RESULTS, POSTS DROP IN SALES

Mark Hamstra

ZAANDAM, Netherlands -- Ahold here, struggling to reconcile its books after profit overstatements of more than $1 billion, delayed for a second time the release of its 2002 earnings report.

In a conference call with analysts, the company said the delay was due to the complicated nature of its accounting review, not to the discovery of any additional accounting problems.

"This process, which is a hard, hard grind, is taking longer than either us or our auditors thought it would," said Dudley Eustace, interim chief financial officer, in a conference call with analysts.

The company's lenders have given Ahold until Sept. 30 to file the 2002 earnings report, which it was scheduled to present last week after an earlier postponement.

Analysts said the company was justifiably cautious.

"I think there's nothing sinister behind it," said James Collins, analyst, ABN Amro, London, noting the forensic accounting investigation that ended in July "threw up a huge set of issues."

He also said he is "not terribly worried" about the company's sales performance in the first half of 2003, although some analysts on the call seemed concerned about an apparent slowdown, particularly in the U.S. retail business.

Total sales through the first two quarters were down 11.8%, to 30.3 billion euros, or $33.5 billion, compared to year-ago levels. In the second quarter, sales totaled $14.3 billion, down 12.4% from the year-ago quarter. The company said weak exchange rates for the U.S. dollar contributed to the decline. Sales were up 2.5% in constant currencies.

The company said its cash flow was better than it expected.

U.S. retail sales improved 1.1% over last year's results, to $6.23 billion, although comparable-store sales fell 1.1% in the period and identical-store sales slid 1.9%. Through the first half, U.S. retail sales increased 3.2%, to $14.52 billion.

Eustace singled out the company's Stop & Shop chain as being "a big supporter of our operations" in the United States, and he said the Giant of Carlisle, Pa., division "has stood out in a positive way."

Separately, an Uruguayan court dealt Ahold a blow last week when it ruled that Ahold could not transfer shares of its Grupo Disco subsidiary in Argentina. Argentinean authorities had seized Disco's assets in June as part of a case brought by former account holders at a division of Velox, Ahold's former partner in Disco.