Annual Report 2019

Ahold Delhaize published its third quarter 2023 results on November 8, 2023

Performance review

Net sales for the financial year ended December 29, 2019, were €66,260 million, an increase of €3,469 million, or 5.5%, compared to net sales of €62,791 million for the financial year ended December 30, 2018. At constant exchange rates, net sales were up by €1,480 million or 2.3%.

Gasoline sales decreased by 6.5% in 2019 to €952 million. At constant exchange rates, gasoline sales decreased by 11.0%, driven by both decreased gasoline prices and decreased volumes.

Net sales excluding gasoline increased in 2019 by €3,534 million, or 5.7%, compared to 2018. At constant exchanges rates, net sales excluding gasoline increased in 2019 by €1,598 million, or 2.5% compared to 2018. Sales growth was negatively impacted by the 11-day strike at Stop & Shop. The direct impact of the strike on net sales is estimated at $224 million, and, in addition, the subsequent sales loss during the recovery period following the strike is estimated to be $121 million. Sales growth was driven by the growth of our eCommerce businesses, new store openings, and positive comparable sales growth in most segments.

We continued to see strong sales growth in our online businesses. Ahold Delhaize’s online businesses contributed €3,493 million to net sales in 2019 (2018: €2,817 million). Net consumer online sales amounted to €4,547 million and increased in 2019 by 28.6% at constant exchange rates.

Underlying operating income was €2,777 million in 2019, up €16 million, or 0.6%, versus €2,761 million in 2018. Underlying operating income margin in 2019 was 4.2%, compared to 4.4% in 2018. At constant exchange rates, underlying operating income was down by €74 million, or 2.6%, compared to 2018. 2019 result was negatively impacted by the strike at Stop & Shop, impacting underlying operating income by approximately $100 million.

With the integration of Ahold and Delhaize fully completed in Q2 2019, we achieved synergies of €512 million on an annual run-rate basis, slightly ahead of our €500 million target.

Tight cost management remains a core objective of our business model. Our Save for Our Customers program has delivered €709 million this year, well on our way to to reach our updated target of €1.9 billion savings by 2021. This enables us to continue to invest in our customer proposition and, at the same time, provides our businesses with optimized store processes and improved sourcing conditions.

In 2019, net sales were €40,066 million, up by €2,606 million or 7.0% compared to 2018. At constant exchange rates, net sales were up by 1.5%. Sales growth was negatively impacted by the 11-day strike at Stop & Shop. The direct impact of the strike on net sales is estimated at $224 million, and, in addition, the subsequent sales loss during the recovery period following the strike is estimated to be $121 million. Comparable sales excluding gasoline for the segment increased by 1.4%, with negative volume. Strong positive comparable sales growth across most of the U.S. brands was only partly offset by negative comparable growth at Stop & Shop and Peapod.

In 2019, underlying operating income was €1,712 million, up by €13 million or 0.7% compared to last year. At constant rates, underlying operating income decreased by (4.3)%.

The United States’ underlying operating income margin in 2019 was 4.3%, down 0.2 percentage points compared to 2018. The 2019 result was negatively impacted by the strike at Stop & Shop, impacting underlying operating income by approximately $100 million. In addition, the results were impacted by higher shrink and supply chain costs, partly offset by increased vendor allowances. Underlying expenses increased compared to last year, mainly driven by salary increases, cost inflation exceeding sales growth (negatively impacted by the strike) and click-and-collect expansion, partly offset by our Save for Our Customers program.

Net sales in 2019 were €14,810 million, up by €592 million or 4.2% compared to 2018. This increase was due to a 3.5% growth in comparable sales, driven by strong sales growth of 21.6% at our online brands, bol.com and ah.nl. For the full year, market share at Albert Heijn in 2019 was 34.9%, flat compared to 2018 (Source: Nielsen).

Bol.com continued its strong net consumer online sales growth from 32.0% in 2018 to 33.2% in 2019. The brand’s business in Belgium and its third-party platform – which currently offers a marketplace to more than 20,000 merchant partners in the Netherlands and Belgium – remain important growth drivers.

In 2019, underlying operating income in The Netherlands was €776 million, up by €28 million or 3.8% compared to 2018. Underlying operating margin in The Netherlands was 5.2% in 2019, down 0.1% compared to 2018. Margins were impacted by higher underlying operating expenses, which were partly offset by better gross margins.

Excluding bol.com, the underlying operating income margin was 5.8% in 2019. This was flat compared to 2018 as a result of saving programs, including synergy savings and Save for Our Customers initiatives, offset mainly by the growth of ah.nl.

Net sales in 2019 were €5,096 million, up €1 million or flat compared to 2018, and comparable sales decreased by 0.1%. The affiliated network continued to show strong growth, driven by accelerated growth in the convenience store format.

Delhaize.be, our online business in Belgium, grew by 14.4% in 2019, as more customers utilized the convenience of home delivery. For the full year, market share for Delhaize in 2019 was 24.1%, slightly up compared to 2018 (Source: Nielsen).

Underlying operating income in 2019 was €149 million, up by €7 million, or 4.4%, compared to last year. Underlying operating income margin in 2019 was 2.9%, up 0.1 percentage points compared to 2018. Underlying operating income benefited from good cost control of underlying expenses and shrink, partly offset by increased logistics costs.

In 2019, net sales in Central and Southeastern Europe (CSE) were €6,288 million, up by €270 million or 4.5% compared to 2018. At constant exchange rates, net sales were up by 4.9%.

Sales growth was driven by comparable sales growth of 3.0% and by the net addition of 162 stores in 2019. Comparable sales growth was driven by our businesses in the Czech Republic, Romania and Serbia, while Greece’s comparable sales growth remained negative as a consequence of the competitive market environment.

In 2019, underlying operating income in CSE was €280 million, up by €6 million or 2.2% from €274 million in 2018. Underlying operating income margin was 4.5%, which was 0.1 percentage points lower than in 2018.

During 2019, we further increased the sale of healthy own-brand products as a portion of total own-brand food sales to 48%. The percentage of our own-brand products with front-of-pack nutritional labeling increased by seven percentage points to 95%.

The percentage of own-brand production sites in high-risk countries that were audited by a third party against social compliance increased by five percentage points to 71%.

Ahold Delhaize drives sustainable sourcing practices through targets on seven critical commodities (tea, coffee, cocoa, palm oil, seafood, soy and wood fiber). We made progress in all areas. We were able to use more certified ingredients for our own-brand products, but we also removed products for which we could not find a sustainable option.

Our purpose

Eat well. Save time. Live better. Our purpose helps us answer the question: what difference are we going to make? Millions of customers around the world turn to our great local brands for their daily needs – and our brands are well-positioned to make a positive difference in their well-being. People’s wants and needs are diverse, but our purpose encompasses the three things we believe they all deserve, and that we can have an impact on.

Eat well.
Not only do we want to make it easy for people to choose a healthy, balanced diet, but also have access to products that are high quality, responsibly sourced – and of course, delicious!

Save time.
People are busy. And in this hectic world, anything we can do to make things quicker, smoother and easier is a good thing.

Live better.
For some, this means healthy eating. For others, shopping more inexpensively or more ethically. Whatever it means to our customers, associates and communities, we’re committed to helping make it happen.

Our growth drivers

To help us fulfill our purpose today and prepare our business for tomorrow, we have intensified our focus and attention on the following growth areas across all our great local brands.

Omnichannel growth
Technology
Healthy and sustainable
Portfolio and scale efficiencies
Best talent

Omnichannel growth

Making it possible for our customers to shop however and whenever is most convenient.

To keep winning in our markets, both today and in the future, we want to be the most trusted partner in connecting customers with the myriad of options available to them. We are working to provide the leading consumer experience across all phases of the customer journey: from planning to shopping to enjoying great food. This means having a seamless omnichannel offering – a unified shopping experience across all our online and offline channels.

We are driving omnichannel growth across all our local brands in three key focus areas: enhancing our stores, strengthening eCommerce and expanding meal solutions.

Meeting the changing needs of urban customers

Technology

Partnering to invest in the technology of the future and deploy it across our company today, to improve the customer experience and increase efficiency.

We believe technology can help people live better – and we are leveraging it for the benefit of our customers and our business. We are using technology to enrich the shopping experience – to anticipate customers’ needs so that we can make shopping seamless and easy. It is helping us increase the efficiency of our business, by modernizing our back office and delivering new digital solutions to transform how we can serve our customers and better utilize our eCommerce scale. And we are working to expand our capabilities and build a strong ecosystem of digital and tech-focused partners, because we know that getting this right will be critical for our future.

Redefining retail through AI and robotics

Augmented reality makes shopping with children more fun

Healthy and sustainable

Inspiring customers to make healthier choices, increase product transparency and eliminate waste.

Our world is facing enormous challenges. Climate change is changing what and how we can feed ourselves – at a time when our global population is growing. Health issues, including disease and obesity, are affecting billions of people. And every year, around one-third of all food produced for human consumption is lost or wasted.

Our new Healthy and Sustainable Strategy looks towards 2025, building on the success and targets we set for 2020. This time, we have defined longer-term targets and will accelerate change across our great local brands. Our ambition for 2025 is to inspire our customers to make healthier choices, increase product transparency, and eliminate waste. We believe these are the areas where we can make the most difference.

Reducing plastic waste in our operations and beyond

Working together to eradicate food waste

Portfolio and scale efficiencies

Having both the ambition and the opportunity to grow our business in a fragmented retail market while scaling our efficiencies to partially self-fund our growth.

We operate a portfolio of strong brands and want to be the consolidator of choice in our markets. Our ambition and the opportunity we have to grow in the fragmented retail market is supported by our strong and predictable cash flow, successful merger integration and synergy delivery, efficient platforms for growth and strong omnichannel proposition.

We will continue to evolve our portfolio of great local brands that are #1 and #2 in their markets. And we will keep working to be as efficient as possible. Through our Save for Our Customers program, we are constantly on the lookout for new ways to save money to reinvest in our business.

Bringing experts into the family to help us serve customers better

Leveraging our scale to bring customers more

Best talent

Staying in the lead by attracting, developing and retaining the best talent, with new capabilities.

We are creating the future of work by building a workforce that can support our omnichannel and digital ambitions. We are pivoting our culture, by embedding our new purpose deeply within the organization and amping up the focus we place on our values of courage, care and teamwork. We are transforming our capabilities, building a digital and data mindset and reskilling our workforce for the future. And finally, we are cultivating our talent so that we have the right people and leaders for the future, by building robust, diverse talent pipelines putting a much stronger focus on diversity and inclusion.

Creating value for our stakeholders

As a global company, we have a large variety of stakeholders. But the four primary groups Ahold Delhaize impacts are our customers, associates, communities and shareholders. We promise all our stakeholders that we'll strive to be a better place to shop, a better place to work and a better neighbor, every day.

Customers
Associates
Communities
Shareholders

Customers

Our business is built on our relationships with our customers.

We help them eat well, save time and live better by enhancing the whole customer journey – from when they plan their shopping, to the shopping experience itself and even afterwards, when they enjoy our products at home or on-the-go.

5.4m

monthly active mobile app users

48%

own-brand food sales from healthy products

66%

net sales generated from customers enrolled in our loyalty programs in 2019

Associates

Our associates are at the center of our relationships with customers and communities.

They bring our Leading Together strategy to life every day, working together to serve customers across our stores, warehouses and support offices. And they are the reason we have deep connections in our local communities.

78%

score on Inclusive Workplace from our associate engagement survey

54%

of the workforce is female

4-6 weeks

amount of fully paid parental leave benefits now available to full-time associates of Ahold Delhaize USA brands

Communities

Our brands are closely connected to their communities, playing a role in the lives of millions of people every day.

Many of our stores are places where neighbors come together not only to shop, but to have a chat, grab a coffee or even share a meal. We feel a deep sense of responsibility for helping people live better in the communities we serve.