Ahold Delhaize USA posted strong overall growth, and particularly significant online growth, in its fourth quarter and fiscal year 2019.
Q4 2019 net sales increased 2.7% to reach USD11.47 billion. Same-store sales excluding gas increased 2.3% and 2.6% when adjusted for weather events that impacted growth in the comparable period a year ago. Helping to drive overall growth was Ahold Delhaize’s online business, which was up 42.7% in Q4 versus the comparable year-ago quarter.
Some of the retailer’s East Coast banners posted particularly strong performance:
- Food Lion reported its 29th consecutive quarter of positive comp sales, bolstering Ahold Delhaize’s growth at a time when other banners have struggled. This reliable banner will likely support Ahold Delhaize as it adjusts and expands other banners. The “Easy, Fresh and Affordable” program rollout continues to support Food Lion’s performance.
- Giant Heirloom Market has flourished with three new stores in the Philadelphia area in 2019 and more planned. The banner is specially designed for urban neighborhoods with a new store concept, format, and product mix. The banner’s expansion demonstrates Ahold Delhaize’s recognition of and attention to the varied needs of its geographically diverse shopper bases.
- Stop & Shop is pursuing its “Reimagine Stop & Shop” program, which has resulted in successful store remodels in Hartford, Conn., and on Long Island. Challenging sales environments for Stop & Shop stores offset growing margins at Food Lion, Giant/Martin’s, and Hannaford, but investment in keeping the banner competitive should pay off in the long run.
Fiscal Year 2019 and Looking Ahead
In addition to strong online growth in recent quarters, Ahold Delhaize USA met its 2019 guidance of over 20% online growth. Aggressive click-and-collect expansion in 2019 yielded another expected outcome: The retailer exceeded its goal of having 600 click-and-collect points in operation in the US by year end, with a total of 692 locations. Online growth fueled an overall strong year of growth.
Ahold Delhaize expects 2020 fiscal year performance to be similar to 2019’s performance. The grocer plans to grow its omnichannel strategy by strengthening the ecommerce solutions that support its leading store brands. This work includes expanding the leadership position of its East Coast banners and aiming to improve online sales growth to 30%. It also wants to reach 1,000 click-and-collect locations by the end of 2020.
Peapod Digital Labs will continue to power much of the Ahold Delhaize’s online fulfillment, with a sole focus on the East Coast market. The retailer will close Midwest online grocery sales operations, which make up 10% of Peapod business, but does not expect this move to significantly impact profits or free cash flow. Though East Coast business is particularly strong, Ahold Delhaize will need to ensure it invests enough in streamlining and growing the eastern business to counteract lost volume in the Midwest.
Ahold Delhaize introduced a three-year initiative during Q4 to move the US supply chain into a fully integrated, self-distribution model. Ultimately, this supply chain transformation plan should help enhance vendor and shopper relationships by lowering costs, saving time, and offering fresher products.
Finally, the retailer plans to remodel 65 more stores as part of the “Reimagine Stop & Shop” program in 2020. Additional successful remodels and store improvements, in tandem with investments in omnichannel efficiency, should set the retailer up well for another year of strong growth.
Despite challenges including labor strikes and competitive environments, Ahold Delhaize posted a successful and positive Q4 and fiscal 2019. Strong and evolving omnichannel growth offered a solid core from which much of the retailer’s growth came and will likely continue to lead the way for continued future growth.
For more information please contact:
Ellie Pinto, Analyst