Boer: Inflation boosts Ahold Delhaize’s U.S. banners

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Boer: Inflation boosts Ahold Delhaize’s U.S. banners

By Lawrence Aylward - 08/09/2017

Has inflation returned? One of the supermarket industry’s worldwide leaders, Dick Boer, seems to think so.

Boer, CEO of Ahold Delhaize, credits the return of inflation with helping the performance of Ahold Delhaize’s U.S. retail banners in the third quarter. Zaandam, Netherlands-based Ahold Delhaize, which operates 21 retail banners in 11 countries, announced Wednesday morning said its second-quarter sales soared 68 percent to $417 million as the company benefited from savings generated by last year’s merger of Ahold and the Delhaize Group to form Ahold Delhaize.

But Boer also mentioned inflation — a word that hasn’t been heard in many months in food retail circles — for spurring U.S. growth.

“In the United States, our sales performance improved with returning inflation, while margins expanded on the back of strong synergy savings,” Boer said in a statement. “Our U.S. brands are well-placed in a fast-changing competitive landscape. We continue to improve the price positioning of our Ahold USA brands and have developed effective competitive plans for Food Lion, facing new competition.”

No doubt that Boer means Lidl when talking about Food Lion’s “new competition.” Food Lion has many stores in North and South Carolina, where Lidl opened some of its first U.S. stores.

The merger of Ahold and Delhaize was announced in June 2015 and became effective on July 24, 2016. The Dutch-Belgian company maintains a robust assortment of store brands that are unique to each of its retailers, including Food Lion, Giant and Stop & Shop in the U.S. The merger has been slower in the U.S. than in Europe, and Boer said Ahold Delhaize is making good progress in setting up its Retail Business Services in the U.S., which combine scale, building expertise in private brands, digital and information technology.

“Additionally, we are implementing a brand-centric operating model to strengthen local competitiveness in our markets,” Boer added.

Ahold Delhaize announced that sales in the second quarter rose 67 percent to $19 billion when compared to the same period in 2016.

"A year after the merger between Ahold and Delhaize, the integration of the two companies is fully on track and delivering results as we continue to focus on strengthening our local brands through our Better Together strategy,” Boer said.

Last December, Boer unveiled Ahold Delhaize’s “Better Together” strategy to fully capture the benefits of its retail banners to drive profitable growth in supermarkets, ecommerce and stores with smaller formats.

"We look toward to the second half of the year with confidence and expect our underlying operating margin for the full year 2017 to be broadly in line with the first half of the year,” Boer said. "We have a successful omni-channel strategy in place that combines a thriving network of brick-and-mortar stores with leading online businesses. We are accelerating investments in our e-commerce operations to further unlock their promising growth potential. We expect close to $3,5 billion of online consumer sales in 2017, putting us on track to achieve nearly $5.5 billion by 2020.”

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