Ahold Delhaize sees improvement in Belgium

Partly thanks to cost savings and improved performance of Delhaize in Belgium Ahold Delhaize look back on a strong first quarter, with higher profitability in Europe.

Better margins

With a quarterly turnover of 21.7 billion euros and an operating profit of 861 million euros, Ahold Delhaize exceeds the expectations of most observers. The better performance in Europe is particularly good news for the retailer: the underlying operating margin rose from 2.8% to 3.2%, while in the US it remained stable at 4%. Net profit did decline, partly due to the costs of the restructuring in Belgium.

The group is reaping the benefits of the cost savings implemented last year and structural simplifications in the organization, says CEO Frans Muller. The most important intervention was Delhaize’s Future Plan in Belgium, in which all 128 integrated branches are transferred to independent entrepreneurs. This led to wildcat strikes in the spring of 2023, but in the meantime the implementation of the plan is proceeding without incident and the prospects appear to be excellent.

Promising results

“To date, 76 stores have been transferred to their new owners and we expect all conversions to take place by the end of the year. We see promising results from the stores that have already made the switch: customer frequency and shopping basket sizes are increasing.” The better performance in Belgium will play an important role in the recovery of European margins in the coming years, the company said.

Ahold Delhaize’s online sales suffered from the sales of the New York e-commerce player FreshDirectbut rose sharply in the other divisions, both at Food Lion and Hannaford in the US as at Albert Heijn. The Dutch market leader is experiencing a negative turnover impact of 1.9 percentage points due to the discontinuation of tobacco sales.