Press release
* at constant exchange rates
Zaandam, the Netherlands, February 12, 2020 – Ahold Delhaize, one of the world’s largest food retail groups and a leader in both supermarkets and eCommerce, reports fourth quarter results today.
Frans Muller, President and CEO of Ahold Delhaize, said: "We ended the year on a high note, with strong group performance in the fourth quarter. We exceeded our full-year 2019 guidance outlook for underlying earnings per share and met our free cash flow guidance. We posted 17.1% growth in underlying earnings per share from continuing operations in the fourth quarter, resulting in an increase of 8.4% for the full year, above our full-year guidance of low-single-digit growth. We also generated €1.8 billion in free cash flow in 2019, achieving our guidance outlook, despite significantly stepping up capital investments in order to drive long-term growth in our business.
"In the U.S., comparable sales growth excluding gasoline accelerated to 2.3% during the quarter, and was 2.6% excluding the net impact from a weather benefit last year. We were encouraged to see the two-year stacked comparable sales growth, adjusted for weather, also accelerated to 5.0% in the fourth quarter versus 4.5% in the third quarter of 2019. Our online sales growth in the U.S. accelerated to 42.7% at constant exchange rates in the fourth quarter, and we met our 2019 guidance outlook of over 20% growth, building upon our position as the leading omnichannel operator on the East Coast. Performance at Food Lion and Hannaford was particularly strong. While Stop & Shop's comparable sales excluding gasoline improved over the last quarter, they remained slightly negative due to a challenging sales environment. That said, our ‘Re-imagine Stop & Shop’ program continues to build momentum with sales in Long Island, and now Hartford, performing in line with our expectations. In 2020, we expect to remodel another 65 Stop & Shop stores across the brand’s footprint.
"In the Netherlands, we saw strong comparable sales growth of 4.3% during the quarter. Market share at Albert Heijn was up significantly year over year in the fourth quarter, an improving trend over previous quarters. Net consumer online sales for the segment were up 27.5%. At bol.com, our online retail platform in the Benelux, net consumer sales grew by 28.7%. In Belgium, comparable sales excluding calendar impacts were up modestly, and we gained market share during the quarter. Our Central and Southeastern Europe segment saw 3.6% comparable sales growth excluding gasoline.
"We continue to make progress on the execution of our Leading Together strategy. We exceeded our guidance for our Save for Our Customers program in 2019, generating €709 million in savings compared to our guidance of €600 million. As a result, we have raised our goal to €1.9 billion in cumulative savings through 2021, compared to our previous target of €1.8 billion. We remain on track to reach our goal of doubling net consumer online sales to €7 billion by 2021. As detailed in a separate press release, we have decided to discontinue our small U.S. Midwest online grocery sales operation, though we remain committed to extending our leading position in the larger East Coast omnichannel operation. We expect U.S. online sales growth to accelerate to 30% or more in 2020, with a total of nearly 1,000 click-and-collect points by the end of 2020, up from 692 in 2019.
"Although we will make significant investments in 2020 to drive long-term growth, we expect group underlying operating margin in 2020 to be broadly in line with 2019. We expect mid-single-digit growth in underlying EPS in 2020."
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This communication includes forward-looking statements. All statements other than statements of historical facts may be forward-looking statements. Words and expressions such as: guidance, outlook, long-term, continues, expectations, 2020, expect, trend, strategy, goal, 2021, remain, on track, to be, constant, are planning, to arrive at, anticipate, is, should, would be, to be, will be, commitments and contingencies, if and when, due on, until, for a period of at least five years, from time to time, or other similar words or expressions are typically used to identify forward-looking statements.
Forward-looking statements are subject to risks, uncertainties and other factors that are difficult to predict and that may cause the actual results of Koninklijke Ahold Delhaize N.V. (the “Company”) to differ materially from future results expressed or implied by such forward-looking statements. Such factors include, but are not limited to, risks relating to the Company’s inability to successfully implement its strategy, manage the growth of its business or realize the anticipated benefits of acquisitions; risks relating to competition and pressure on profit margins in the food retail industry; the impact of economic conditions on consumer spending; turbulence in the global capital markets; natural disasters and geopolitical events; climate change; raw material scarcity and human rights developments in the supply chain; disruption of operations and other factors negatively affecting the Company’s suppliers; the unsuccessful operation of the Company’s franchised and affiliated stores; changes in supplier terms and the inability to pass on cost increases to prices; risks related to corporate responsibility and sustainable retailing; food safety issues resulting in product liability claims and adverse publicity; environmental liabilities associated with the properties that the Company owns or leases; competitive labor markets, changes in labor conditions and labor disruptions; increases in costs associated with the Company’s defined benefit pension plans; the failure or breach of security of IT systems; the Company’s inability to successfully complete divestitures and the effect of contingent liabilities arising from completed divestitures; antitrust and similar legislation; unexpected outcomes in the Company’s legal proceedings; additional expenses or capital expenditures associated with compliance with federal, regional, state and local laws and regulations; unexpected outcomes with respect to tax audits; the impact of the Company’s outstanding financial debt; the Company’s ability to generate positive cash flows; fluctuation in interest rates; the change in reference interest rate; the impact of downgrades of the Company’s credit ratings and the associated increase in the Company’s cost of borrowing; exchange rate fluctuations; inherent limitations in the Company’s control systems; changes in accounting standards; adverse results arising from the Company’s claims against its self-insurance program; the Company’s inability to locate appropriate real estate or enter into real estate leases on commercially acceptable terms; and other factors discussed in the Company’s public filings and other disclosures.
Forward-looking statements reflect the current views of the Company’s management and assumptions based on information currently available to the Company’s management. Forward-looking statements speak only as of the date they are made, and the Company does not assume any obligation to update such statements, except as required by law.