AMSTERDAM — Royal Ahold's U.S. subsidiary saw net sales rise 3.4% in light of challenging market conditions, the retailer reported last week.
Ahold USA, which consists of such brands as Stop & Shop, Giant Carlisle, Giant Landover, Martin's and Peapod, experienced a 2.2% increase in identical sales (2.2% excluding gasoline) benefiting from the timing of Easter and a result of promotional activities across the banners. Underlying operating margin was 4.3%, compared with 4.1% last year. The company attributed its strong margin performance to cost improvements, ongoing operational efficiencies and lower health and welfare costs during the quarter.
Meanwhile, for the first half of the fiscal year, net sales for Ahold USA were $13.8 billion, an increase of 3.1%. Identical sales were up 1.7% (1% excluding gasoline). Underlying operating margin was 4.2%, compared with 4.4% last year.
"We saw ongoing high levels of promotional activity in both the United States and the Netherlands with retail price inflation coming down, particularly in the United States," Ahold CEO Dick Boer said. "Our businesses in the United States achieved strong margins through stringent cost control. We expect market conditions to remain difficult and are cautious about the potential impact of rising food commodity costs, particularly in the United States for the balance of the year. We are confident that we are well on track to deliver on our strategy and we will continue to invest in growth."
Boer added that the company was pleased with the conversion of 15 Genuardi's stores to Giant Food Stores, a transaction that was completed earlier this year.