LONDON, June 3 (Reuters) – Consumers are still subdued despite signs of a broader economic recovery, Dutch grocer Ahold (AHLN.AS) said on Thursday, overshadowing news of a 3 percent rise in quarterly profit and that it is outperforming rivals.
The group, which runs Dutch market leader Albert Heijn but makes about 60 percent of its sales in the United States, also gave no clues on how close it is to spending its 2-billion-euro ($2.5 billion) cash pile, which it has earmarked for acquisitions in existing and adjacent markets.
At 0815 GMT Ahold shares, which had outperformed the STOXX 600 European retail index .SXRP by 6 percent this year, were down 1.7 percent at 10.38 euros, lagging a 1.3 percent rise in the sector index.
UBS analyst Matthew Taylor described the performance in the United States, where Ahold posted a 0.1 percent fall in same-store sales excluding petrol, as slightly disappointing.
Analysts had expected a 0.4 percent rise in underlying U.S. sales.
But this was more than offset by a 2.8 percent increase in same-store sales in the Netherlands, which beat forecasts of a 1.3 percent increase, and cost savings which helped to keep the group underlying retail operating margin flat at 4.9 percent.
First-quarter operating profit rose 3.3 percent to 409 million euros, just ahead of analysts’ forecast of 404 million euros in a Reuters poll of eight. [ID:nLDE65107J]
Ahold, which trades from over 3,500 stores in 11 countries, said it was gaining market share in all of its markets, helped by a focus on low prices and promotions.
TOUGH TRADING
Retailers in Europe and the United States have been struggling with falling food prices and a reluctance among shoppers to step up spending despite signs of economic recovery.
U.S. grocers Safeway (SWY.N), Supervalu (SVU.N) and Kroger (KR.N) have all reported pressure on profits recently, while Belgium’s Delhaize (DELB.BR), which also big in the United sales, posted a 1.8 percent drop in U.S. same-store sales. [ID:nN20145215 [ID:nN20145215] [ID:nN09223537] [ID:nLDE6430VS]
“We certainly have not seen any evidence of trading up in the quarter,” Ahold Chief Executive John Rishton said.
“That means we’ve seen a consistent high level of promotional activity,” he told reporters on a conference call.
Rishton said food prices continued to fall in the first quarter, although the decline had eased in the United States a little bit more than in Europe.
Food price inflation should return, probably in the second half of this year, he said.
Net sales rose 1 percent to 8.74 billion euros, boosted by last year’s purchase of Ukrop stores in the United States.
Ahold, which trades as Stop & Shop, Giant-Landover and Giant-Carlisle in the eastern United States, has said it will look at more acquisitions in existing and adjacent markets, and plans to add a few new stores in Belgium.
Rishton said he had a team working in Belgium, and that he was confident of achieving success there. But he also said it would take time to find the right real estate and declined to say when the first store might open.
Rishton said he did not feel under pressure from shareholders to move more quickly on using the firm’s cash pile.
“The only pressure I feel from shareholders is to make sure we do the right thing, in the right way, at the right time, and we’ll make sure we do that,” he said. ($1=.8176 Euro) (Editing by Hans Peters)
