GuruFocus -
- Net Sales: EUR 22 billion, a growth of 1%.
- Group Online Sales: Increased by 5.1%.
- Underlying Operating Margin: 3.9%, a 10 basis points improvement.
- Diluted Earnings Per Share: EUR 0.62, up 7%.
- US Net Sales: EUR 13.5 billion, down 0.1%.
- US Online Sales Growth: 15.3% adjusted for FreshDirect impact.
- US Underlying Operating Margin: 4.2%, up 10 basis points.
- Europe Net Sales: EUR 8.5 billion, up 2.6%.
- Europe Online Sales Growth: Increased by 10%.
- Bol.com Sales: EUR 0.7 billion, up 6.1%.
- Europe Underlying Operating Margin: 3.9%, up 50 basis points.
- Free Cash Flow: EUR 535 million, an increase of EUR 23 million compared to Q3 last year.
- Share Buyback Program: EUR 1 billion annual plan, with 27 million shares bought back for EUR 761 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Koninklijke Ahold Delhaize NV (ADRNY) reported solid and consistent performance in Q3 2024, with a focus on quality execution and customer relationships.
- The company achieved a 12.4% increase in group online sales, excluding the divestment of FreshDirect, driven by new customer growth and strong retention.
- In the US, the company expanded its click-and-collect locations by over 70 and saw a 40% increase in DoorDash (NASDAQ:DASH) orders in Q3 compared to Q2.
- Albert Heijn in the Netherlands experienced double-digit online sales growth, supported by increased logistics capacity and digital innovations.
- The company completed the conversion of 128 Delhaize stores in Belgium, resulting in strong market share recovery and double-digit sales growth in converted stores.
- The company faced challenges with low top-line inflation and high cost inflation, requiring disciplined management.
- The closure of 32 underperforming Stop & Shop stores resulted in a $38 million reduction in sales and a nonrecurring pretax charge of $136 million.
- Net sales in the US decreased by 0.1%, impacted by the divestment of FreshDirect and a decline in gasoline sales.
- The end of tobacco sales in the Netherlands negatively impacted net sales by 3.3 percentage points.
- Higher labor costs and increased price investments partially offset positive impacts from margin mix in the US.
A: In the US, we expect the Q4 margin to be at least at the level of Q3's 4.2%. In Europe, we see a positive trend in margin development, largely due to the restructuring in Belgium. Regarding volumes, we saw positive volumes in the US in October, indicating that our investments in customer value propositions are starting to create momentum.
Q: How are the price investments at Stop & Shop progressing, and are you seeing any response in terms of volume? Additionally, how have the new omnichannel remodels at Food Lion in Raleigh been received?
A: At Stop & Shop, we are seeing positive responses in units and frequency from our price investments, particularly in Connecticut and Rhode Island. For Food Lion, the remodels in Raleigh-Durham have been well-received, with positive sales uplift expected as we continue with the Charlotte market.
Q: Could you expand on the Q4 margin expectations for the US and any cash costs we should model for Stop & Shop and the Belgium future plan?
A: We reiterate our group guidance for at least a 4% margin. The Stop & Shop closure and Belgium future plan are near finalization and will not have significant cash consequences going forward. The Q4 margin for the US is expected to be at least at the level of Q3.
Q: Can you provide some building blocks for the improvement in margin in Europe, and explain the nonrecurring expenses of EUR100 million?
A: The main improvement in European margins comes from the recovery in Belgium after converting stores to entrepreneurs. The nonrecurring expenses were primarily related to the final phase of the Belgium future plan and Stop & Shop closures, aligning with previous communications.
Q: How should we think about the scale of price investments in the 25 stores in Rhode Island, and will this be rolled out to the entire network next year?
A: In Rhode Island, we adjusted prices on 3,500 products as part of a broader strategy to improve price perception. We plan to invest USD1 billion in price over the next four years, with Stop & Shop playing a significant role. The investments are part of our strategy to enhance competitiveness.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.