Ahold Delhaize US reported comp sales growth of 1.2% for Q1 2019 (2.2% comp growth if not for the Easter shift). In addition, online sales growth came in at 13% for the quarter. This is on par with what we have seen from Ahold Delhaize US over the past year. The retailer delivers growth, but the growth is fairly uninspiring.
Ahold Delhaize US continues to invest in the core of the business, including ongoing investment in Food Lion remodels and expansion of the ecommerce business with a new eCommerce hub in Pennsylvania. We also see Ahold Delhaize trying some new things with the Giant Heirloom Market format and the "Reimagined Stop & Shop" stores. And while I am a huge proponent of focusing on the core business and getting that right first, Ahold Delhaize needs to figure out how to move beyond simply rightsizing the basics to creating a differentiated grocery experience. That is how it will be able to drive comp sales greater than 1% or 2%. The good news is that it is possible -- traditional supermarkets are not dead. We see several regional chains producing strong comp growth. The bad news is that those regional chains, or regional power players as we like to call them, have a head start. They are already evolving their stores and businesses to be more experiential and to better meet the changing demands of today’s shoppers.
It is worth noting that Ahold Delhaize has been dealing with a significant disruption from the Stop & Shop strike, which for everyone involved, is thankfully behind them. The strike had no impact on the Q1 2019 results, but the impact is expected to be missed sales of $200 million, with $90 million to $110 million loss of operating profit. Ahold Delhaize has reduced total 2019 operating margin and earnings per share as a result.
Overall, this was a predicable quarter for Ahold Delhaize US -- not bad, but not great either. Hopefully, the retailer is able to build some momentum around the digital and store format initiatives it has going on to create inspiring results in the future.
For more information please contact:
Tory Gundelach, Vice President, Retail Insights