Profit of parent company Albert Heijn decreases due to reorganization in Belgium

Supermarket group Ahold Delhaize recorded a lower profit in the first quarter. The parent company of Albert Heijn, bol, Etos and Gall & Gall, among other things, incurred more costs in Belgium. Last year, Ahold Delhaize sold all its own Delhaize branches to franchisees, which entailed additional costs.

Net profit fell by 8.6 percent to 513 million euros, partly due to these additional costs. The sale of the Delhaize stores last year was accompanied by strikes by employees who were afraid of a deterioration in their employment conditions.

The fact that there were no major work stoppages in the first three months of this year helped Ahold Delhaize to increase turnover. The group’s revenues rose steadily by 0.4 percent to 21.7 billion euros.

This was mainly due to the supermarkets in Europe. Albert Heijn expanded in the Netherlands because supermarkets of former southern Dutch competitor Jan Linders became franchisees of the formula. Online sales of groceries also rose sharply. In the United States, Ahold Delhaize’s largest market, supermarkets were struggling with lower revenues from gasoline sales and the divestiture of online supermarket FreshDirect.

Profit margins at Ahold Delhaize, always an important point for retail companies, remained stable, according to CEO Frans Muller. Adjusted for, among other things, the impact of the Belgian reorganization, profitability in Europe would have increased despite cost increases thanks to cost-saving measures.

Muller hopes that this will provide financial scope to further invest in a cheaper supermarket range, especially in the US. Here, consumers with lower incomes are faced with the scaling back of government support to keep groceries affordable, which also weighed on Ahold Delhaize’s results.

Last year, Ahold Delhaize mainly had to rely on price increases to increase turnover, while the quantity of products sold fell due to high inflation. It is not immediately clear from the first quarter figures whether there was volume growth in Ahold Delhaize’s first three months.

Ahold Delhaize once again warned in its first quarter results about the impact of ending tobacco sales by supermarkets in the Netherlands. This reduces turnover by approximately 2 to 3 percentage points.