Comparable U.S. sales at Ahold Delhaize surged 34% in March, as consumers stocked up on groceries for extended stays at home amid the coronavirus outbreak.
The global food retailer said yesterday the year-over-year gain, which excludes fuel, will help drive a double-digit comp sales increase at Ahold Delhaize USA for the fiscal 2020 first quarter. In Europe, March comp sales excluding gasoline also saw sharp growth, rising about 16%.
“Due to COVID-19, demand across our multichannel network in the eastern U.S. and Europe increased significantly in Q1,” Frans Muller (left), president and CEO of Zaandam, Netherlands-based Ahold Delhaize, said in a statement. “As a result, we expect group net sales growth of approximately 15% in Q1, or 13% in constant currency. Comparable sales growth excluding gasoline is expected to be approximately 14% in the U.S. and 10% in Europe in Q1.”
U.S. customers began stock-up purchases in March, a bit later than Ahold Delhaize’s European shoppers, Muller noted. “In Europe, we saw slightly earlier customer stockpiling, beginning in late February, which accelerated into March,” he said.
Ahold Delhaize is scheduled to report first-quarter results on May 7. The company said it expects a year-over-year gain in underlying operating margin, lifted by the higher sales trends and partially offset by significant investments in associate pay and benefits and additional COVID-19 safety and protective measures.
“We are extremely proud of the talented and hard-working associates across our brands around the globe, who have worked tirelessly to serve their local communities in this time of need during the COVID-19 crisis,” Muller commented. “Every one of our local brands remains committed to protecting the health and safety of associates and customers.”
In the United States, Ahold Delhaize operates 1,973 stores on the East Coast through its Stop & Shop, Giant Food, The Giant Company, Food Lion and Hannaford supermarket chains. It also operates online grocer Peapod. Ahold Delhaize’s retail store network also includes nearly 5,000 stores in the Netherlands, Belgium, Central and Southeastern Europe and Indonesia (joint venture).
“COVID-19 has created uncertainty for our 2020 outlook, and it is too early to know how this will ultimately impact our great local brands and the communities that they serve. Although we continued to experience higher than normal sales growth through the end of March, there is increased uncertainty in sales over the course of the year, especially as it applies to changes in consumer shopping patterns and behavior,” Muller said.
Despite increased investments in coronavirus safety measures and the unlikelihood of upholding the higher-than-normal underlying operating margin in the first quarter, Ahold Delhaize is maintaining its full year outlook.
“The group underlying operating margin will be broadly in line with 2019,” according to Muller. “We continue to expect underlying earnings per share growth in the mid-single-digit range for the year.”
So far, Ahold Delhaize has invested more than €170 million ($185 million U.S.) overall in coronavirus relief and support, including health and protection initiatives for employees and customers, enhanced benefits for frontline workers and community donations.
Of that total, €44 million ($48 million) has been earmarked for extra safety and protective measures for associates, such as plexiglass shields at checkout and new store-flow patterns to foster social distancing, Ahold Delhaize said.
Associate pay and benefits — including assistance programs to provide health and wellness support — also have been enhanced by the retailer’s brands in the U.S., Europe and Indonesia. To help meet increased demands due to coronavirus, Ahold Delhaize said it also aims to hire more than 40,000 workers, including those displaced in hard-hit sector such as travel, tourism, and hospitality.
Efforts to safeguard shoppers include new in-store signage and markers to promote social distancing; special opening hours for seniors, vulnerable consumers and first responder/emergency personnel. Some Ahold Delhaize brands also have launched special grocery delivery services for health care workers. More extensive cleaning and hygiene measures, too, have been instituted across brands, such as shopping cart cleaning before and after customer use.
Combined, Ahold Delhaize brands have thus far committed nearly €20 million ($22 million) in charitable donations to support local food banks, feeding of first responders in hard-hit areas, national and private health systems, the Red Cross, and medical facilities researching COVID-19.
“In this time of acute need we see people coming together across all our communities to help each other through this pandemic,” Muller said. “Ahold Delhaize and all our local brands in the U.S., Europe and Indonesia are taking substantial measures to ensure the safety of both associates and customers in response to the significant challenges created by the COVID-19 pandemic. Fighting this requires everyone’s support, and I am pleased with our efforts to date.”
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