ch owner of US Stop & Shop stores, reported second-quarter earnings that missed estimates as accelerated store openings by rivals contributed to a loss of market share in the US.Underlying operating income fell 13 per cent to €288 million at constant exchange rates, Ahold said today. The median estimate of 11 analysts surveyed by Bloomberg was €291 million. Operating income in the US dropped 14 per cent, while identical sales, excluding gasoline, fell 1.8 per cent, more than predicted.
Ahold’s market share in the US, the source of more than half its sales, saw a “limited” drop, chief executive officer Dick Boer said on a call with journalists. The Giant Landover chain, which operates in Virginia, Maryland, Delaware and the District of Columbia, was affected by competitors’ openings, while the market in New England was stagnant, he said.
“What you see is that specific competitors are regrouping,” said Robert Jan Vos, an analyst at ABN Amro, citing Shaw’s, which was among chains acquired last year by a Cerberus Capital Management LP-led investor group for $3.3 billion. “Ahold is having a relatively low number of new store openings,” Jan Vos said.
The grocer said it has cut prices and modified its product range in the US, and is “tailoring to the competition,” meaning the actions it’s taking can vary by region.
US Acquisitions
Acquisitions may form part of the company’s plans. Ahold is open to purchases in the US and is focusing on supermarkets and convenience stores, Boer said.
One of Ahold’s rivals in New England, Market Basket Inc., is seeking a buyer as its family owners battle each other for control. The Dutch company declined to comment on whether it has an interest in Market Basket.
A large number of overlapping store locations means that were Ahold to buy Market Basket, some outlets might have to be closed, making a takeover less likely, Vos said.
Ahold recently opened a warehouse in New Jersey, almost doubling the capacity of its online service Peapod.
The proportion of sales gained online continued to increase in the quarter, reaching 3.7 per cent, the company said. That’s up from 3 per cent a year earlier and about the same as in the first quarter. On an identical-store basis, online sales increased 19 per cent from a year ago.
Ahold is stepping up investment in Internet offerings, adding pickup points and offering delivery to a wider range of customers, part of its plan to generate more than €1.5 billion from online sales by 2016.
