Company Reports

Ahold Delhaize released first-quarter results with sales, excluding gas, up 0.4% (up 1.3% at constant exchange rates). Sales were slightly ahead of company-compiled consensus expectations (EUR 21.728 billion versus EUR 21.530 billion for consensus), with underlying operating income of EUR 861 million (4% margin), ahead of the EUR 824 million estimate from consensus. This was driven by improvements in Europe (EUR 268 million versus expectations for EUR 260 million) and better-than-expected US performance (EUR 614 million versus EUR 594 million for consensus). Comparable sales growth for the first quarter was 0.8% for the US and 2.8% for Europe, versus 0% and 2.2% for consensus, respectively. In a strategic shift toward growth, the company is simplifying its operations and enhancing its Save for Our Customers program, notably through the Belgium Future Plan, which has successfully transitioned 76 of 128 stores to franchises, leading to increased customer frequency and larger basket sizes. Despite inflationary pressures, this has contributed to a 0.3 percentage point improvement in first-quarter margins across European operations, supporting consistent group-level margins and enabling enhanced investments in US customer value propositions amid reductions in supplemental nutrition assistance program benefits.

Ahold Delhaize released fourth-quarter and fiscal 2023 results with sales, excluding gas, up 1.8% and 3.9% respectively (up 1.9% and 3.8% respectively at constant exchange rates). Sales were slightly ahead of our annual estimates (EUR 88.65 billion versus EUR 88 billion in our model), with underlying operating income of EUR 3.604 billion (4.1% margin), slightly ahead of our EUR 3.583 billion estimate for the fiscal year. This was driven by the U.S. segment (EUR 2.553 billion versus our expectations for EUR 2.499 billion) with Europe largely in line (EUR 1.120 billion versus EUR 1.128 billion in our model). Comparable sales growth in fiscal 2023 was 2.3% for the United States and 6.5% for Europe, versus 1.9% and 6% in our model. In the U.S., the reduction in emergency federal supplemental nutrition assistance program benefits is still hitting top-line performance with net sales down 1.5% in the fourth quarter. Excluding one-offs and despite growth headwinds, the grocer was still able to maintain margins in the region, a testament to its continuing focus on efficiencies and cost-savings. In Europe, like-for-like sales growth was up 6.5% in the fourth quarter, signaling the first positive volume trend in over two years.

Koninklijke Ahold Delhaize is one of the largest grocers in the United States with over $60 billion in sales. It holds the number-one or number-two position in most of its markets with Albert Heijn in the Netherlands the group's most prized asset, commanding over 35% share. The company has generally managed its expansion and operations prudently, with low levels of financial leverage and a strategy of financing its dividend and share buybacks using its free cash flow.

No-moat Ahold Delhaize released third-quarter results, with sales excluding gas up 3% to EUR 21.9 billion (up 2.9% at constant exchange rates). Sales were slightly below company-compiled consensus of EUR 21.95 billion, with underlying operating income of EUR 839 million (3.8% margin) missing the consensus estimate of EUR 856 million. The profit miss was driven by the U.S. segment (EUR 567 million versus expectations for EUR 605 million) with Europe largely in line (EUR 287 million versus consensus of EUR 283 million). Comparable sales growth was 0.9% for the United States and 7% for Europe, versus 1.5% and 5.5% estimates for company-compiled consensus. In the U.S., the main driver of underperformance was the reduction in emergency federal Supplemental Nutrition Assistance Program benefits, which according to the company resulted in around a 4% headwind to sales growth in the quarter. This along with a changing sales mix and increasing shrink contributed to lower U.S. margins in the quarter, a negative development that the company sees as lasting only a couple of quarters. In Europe, excluding the impact of strikes in Belgium following the company's announcement of its intention to transform its integrated supermarkets into independently managed Delhaize stores, comparable sales were up 7.2%.

Ahold Delhaize released second-quarter results, with sales up 2.9% to EUR 22.1 billion (up 4.3% at constant exchange rates). Sales were in line with company-compiled consensus (EUR 22.05 billion), with underlying operating income of EUR 904 million ahead of consensus (EUR 859 million for company-compiled consensus). Comparable sales growth was 3.6% and 6.3% for the United States and Europe, respectively, versus 3.5% and 5.1% estimates for company-compiled consensus. In the U.S., the main driver of outperformance was the continued strong performance of remodeled stores and the resilient performance of loyalty programs and online channels. In Europe, excluding the impact of strikes in Belgium following the announcement by the company of its intention to transform its integrated supermarkets into independently managed Delhaize stores, comparable sales were up 7.6%. On profitability, the underlying operating margin for the group was 4.1%, in line with the prior year, with resilient U.S. margins (at 4.6% or 10 basis points lower, with Food Lion and Hannaford continuing to gain market share) offsetting margin declines in Europe (caused by energy costs and strikes). Excluding escalating energy costs and Belgium strikes, underlying margins were modestly ahead of prior-year levels.

Ahold Delhaize released first-quarter results with sales up 9.4% to EUR 21.6 billion (up 6.3% at constant exchange rates). Sales were slightly ahead of company-compiled consensus (EUR 21.5 billion) with underlying operating income of EUR 822 million broadly in line (EUR 828 million for company-compiled consensus ). Comparable sales growth was 6.2% and 6.1% for the U.S. and Europe, respectively, versus 5.5% and 5.6% estimates for company-compiled consensus. In the U.S., the main driver of outperformance was the continued strong performance of remodeled stores and the resilient performance of loyalty programs and online channels. In Europe, excluding the impact of strikes in Belgium following the announcement by the company of its intention to transform its integrated supermarkets into independently managed Delhaize stores, comparable sales were up 7.7% (a 200-basis-point impact). On profitability, the underlying operating margin for the group was 4% (a 20-basis-point decline), with strong U.S. margins (at 4.8% or 40 basis points higher due to better availability from improving supply chains) offsetting margin declines in Europe (due to energy costs and strikes) and a reduction in Global Support Office insurance gains. Excluding escalating energy costs and Belgium strikes, underlying margins were modestly ahead of prior-year levels (3.5% in the first quarter of 2022).

Koninklijke Ahold Delhaize is the fourth-largest grocer in the United States with almost $60 billion in sales. It holds the number-one or number-two position in most of the markets in which it operates, with Albert Heijn in the Netherlands the group's most successful business, commanding about 37% share. The company has generally managed its expansion and operations prudently, with low levels of financial leverage and a strategy of financing its dividend and share buybacks using its free cash flow.

Koninklijke Ahold Delhaize is the fourth-largest grocer in the United States with more than $40 billion in sales. It holds the number-one or number-two position in most of the markets in which it operates, with Albert Heijn in the Netherlands the group's most successful business unit, commanding about 35% share. The company sports strong free cash flow generation and has generally managed its expansion and operations prudently, with low levels of financial leverage and a strategy of financing its dividend and share buybacks using its ample cash flow.

Ahold Delhaize released fourth-quarter results that included sales up 15.9% to EUR 23.4 billion (up 8.1% at constant exchange rates), surprising on the upside. More specifically, sales were ahead of the company-compiled consensus (EUR 23.4 billion versus EUR 23.29 billion) with underlying operating income of EUR 1,026 million ahead of the EUR 890 million company-compiled consensus, primarily driven by higher-than-expected cost savings (EUR 100 million over expectations). Comparable sales growth was 9.3% and 5.7% for the U.S. and Europe, respectively, versus 8.1% and 5.9% estimates for company-compiled consensus. In the U.S., the main driver of outperformance was the strong performance of remodeled stores at Stop & Shop and the resilient performance of loyalty programs and online channel. In Europe, bol.com and the challenging e-commerce market in Benelux weighed on top-line growth (Europe up 6.9% excluding bol.com).

Koninklijke Ahold Delhaize released third-quarter results that included net sales up 20.8% to EUR 22.4 billion (up 9.1% at constant exchange rates), surprising on the upside. More specifically, net sales were ahead of the company-compiled consensus (EUR 22.4 billion versus EUR 21.8 billion) with underlying operating income of EUR 993 million ahead of the EUR 883 million company-compiled consensus. Comparable sales growth was 8.2% and 7.4% for the United States and Europe, respectively, versus 6.2% and 5.2% estimates for company-compiled consensus.

Koninklijke Ahold Delhaize released first-half results that included net sales up 11.7% to EUR 41.2 billion (up 5% at constant exchange rates), with the second-quarter top and bottom lines surprising on the upside. More specifically, net sales were ahead of the company-compiled consensus (EUR 21.445 billion versus EUR 21.035 billion) with underlying operating income of EUR 880 million ahead of the EUR 815 million company-compiled consensus. Comparable sales growth was 6.4% and 1.8% for the United States and Europe, respectively, versus 4.4% and 0.8% estimates for company-compiled consensus.

Koninklijke Ahold Delhaize released first-quarter results with sales up 8.3% at EUR 19.8 billion (up 3.6% at constant-exchange rates), ahead of company-compiled consensus (EUR 19.455 billion). Comp sales growth was up 3.3% and down 3.1% for U.S. and Europe respectively, versus up 3.7% and down 2.7% growth estimates for company-compiled consensus. Online sales declined 1%, primarily the result of tough first-quarter 2021 comparables (up 103.3%) and a slowdown in bol.com (excluding bol.com, online sales were up 4.6%). The firm's underlying operating margin was 4.2% or EUR 829 million (versus EUR 778 million for consensus), up 20 basis points, mainly a function of largely noncash insurance gains. In terms of guidance, the group now expects EPS "to be comparable" with 2021 versus a "low to midsingle digits" decline previously (down 4% in our model and down 2% for consensus). The firm continues to expect EUR 1.70 billion in free cash flow versus EUR 1.65 billion in our model. Finally, Ahold Delhaize reiterated increased capital expenditure guidance at 3.5% of sales at the group level with 0.5% earmarked for investments in bol.com. Despite our EPS estimates for fiscal 2022 being somewhat lower than fresh guidance, we don't expect to materially change our EUR 24.50 fair value estimate (other than the time value of money) as free cash flow guidance was unchanged and in line with our estimates. Shares are slightly overvalued.

We don't expect to change our fair value estimates for our European food value chain coverage list due to the recent Russia-Ukraine conflict.

Koninklijke Ahold Delhaize released fourth-quarter results with sales up 2.8% at EUR 20.1 billion, broadly in line with company-compiled consensus. Comp sales growth was up 4.8% and down 1% for U.S. and Europe respectively, better than up 3.2% and down 0.4% growth estimates for company-compiled consensus. Online sales growth across regions remained strong (up 30.5% in the U.S., 14.7% for the group), reflecting its resilience and solid presence in the channel. The firm's underlying operating margin was 4.2% or EUR 838 million (versus EUR 820 million for consensus), down 20 basis points, mainly a function of Europe's lower-than-expected EBIT at EUR 334 million versus EUR 361 million for consensus. Adjusted EPS for the year was ahead of our and consensus estimates (EUR 2.19 versus EUR 2.15) with underlying operating income at 4.3%, in line with our estimates and below guidance of 4.4%. Free cash flow of about EUR 1.6 billion was lower than our estimates of EUR 1.8 million but was mainly driven by an unforeseen EUR 380 million tax payment (disputed tax claim). In terms of guidance, which we believe was the main driver behind the Feb. 16 share price underperformance (shares about 6% down at the time of writing), the group now expects an EPS decline in "low- to midsingle digits" versus down 4% in our model and down 1% for consensus. The firm also expects EUR 1.7 billion in free cash flow versus EUR 1.65 billion in our model and EUR 1.5 billion for consensus. Finally, the firm reiterated increased capital expenditure guidance at 3.5% of sales at the group level with 0.5% earmarked for investments in bol.com, while it now projects grocery (excluding bol.com) free cash flow generation of at least EUR 7 billion for the period 2022-25 versus EUR 7.2 billion in our model including bol.com. Given our EPS estimates for fiscal 2022 are in line with the guided range, we don't expect to materially change our EUR 24.5 fair value estimate. Post-correction, shares are fairly valued.

Ahead of its capital markets day on Nov. 15, Ahold Delhaize announced its new and refreshed investment plan to accelerate growth and drive more customer value. As part of this plan, the group expects to accelerate sale growth rates with about EUR 10 billion of incremental sales over 2023-25 (versus EUR 3.2 billion in our model), generate cumulative cost savings of about EUR 4 billion (2022-25) and introduce a new EUR 1 billion share buyback program for 2022 (EUR 1 billion in our model). In online, net consumer online sales are expected to double and achieve fully allocated e-commerce profitability (expected by 2025 but not disclosed). Within this, Ahold Delhaize disclosed bol.com's projected 2021 net consumer online sales and EBITDA of about EUR 5.5 billion and EUR 150 million-170 million (implying 3% margin), which the group expects to double by 2025. The investment plan will result in an increased capital expenditure budget of 3.5% from 3% of sales previously (versus 3% and declining over the years in our model). Interestingly, cumulative free cash flow for 2022-25 is expected to be over EUR 6 billion or EUR 1.5 billion per year on average, significantly lower than our estimates (about EUR 8.6 billion for the same period in our model). This is certainly a positive set of targets for Ahold Delhaize, and although free cash flow expectations were a negative surprise, we think this is a function of a growth-orientated investment plan. We expect to increase our fair value estimate for Ahold Delhaize by a mid- to high-single-digit percentage after incorporating part of the very ambitious sales growth targets, the positive effect of which will be partially offset by higher investments (and lower free cash flow generation) over the 2022-25 investment period. A potential bol.com IPO can unlock additional value for the group as valuations attached to online retailers with long growth runaways can be significantly higher than that of a slow-growing grocer.

Koninklijke Ahold Delhaize released third-quarter results with sales up 4.6% at EUR 18.5 billion versus 18 billion for company-compiled consensus. Comp sales growth was up 2.9% and down 0.2% for U.S. and Europe, respectively, better than the 0.1% and down 0.5% estimates for company compiled consensus. Online sales growth across regions continued to be strong (up 52.9% in the U.S., 30.6% for the group), reflecting the group's resilience and solid presence in the channel. The underlying operating margin for the group was 4.4% or EUR 812 million (versus EUR 748 million for consensus, primarily driven by U.S.), down 20 basis points, a function of tough comparisons from unusually high operating leverage from last year due to COVID-19. In terms of guidance, the group raised its EPS growth (versus 2019 comparison base) outlook for the year to the 21%-25% range (versus 29% in our model and mid- to high-single-digit growth guidance previously), and free cash flow expectations (to EUR 1.7 billion from EUR 1.6 billion), while it reiterated guidance on capital expenditures ( EUR 2.2 billion versus EUR 2.3 billion in our model) and share buybacks (EUR 1 billion, in line with our estimates). Given our EPS estimates were already ahead of both consensus and guidance, we don't expect to materially change our EUR 24.5 fair value estimate. Shares trade in 2-star territory.

Koninklijke Ahold Delhaize is the fourth-largest grocer in the United States with more than $40 billion in sales. It holds the number-one or number-two position in most of the markets in which it operates, with Albert Heijn in the Netherlands the group's most successful business unit, commanding about 35% market share. The company sports best-in-class free cash flow generation and has generally managed its expansion and operations prudently, with low levels of financial leverage and a strategy of financing its dividend and share buybacks using its ample free cash flow.

Koninklijke Ahold Delhaize released second-quarter results that included sales up 3% (at constant currency) to EUR 18.6 billion, ahead of company-compiled consensus expectations of EUR 17.9 billion. Comparable sales growth was down 1.5% for the United States and up 2.4% for Europe versus consensus of 0% and 0.6%, respectively. Online sales growth across regions continued to be strong (up 61% in the U.S. and 26.9% in Europe), reflecting the group's resilience and solid presence in online as well as the long-lasting impact of COVID-19 on consumer behavior. The underlying operating margin for the group was 4.4%, down 80 basis points versus last year, a function of tough 2020 comparables due to robust sales growth and operating leverage benefits that preceded significant investments related to the coronavirus to enhance pay and benefits, as well as extra costs associated with safety measures in stores.

Koninklijke Ahold Delhaize is the fourth-largest grocer in the United States with more than $40 billion in sales. It holds the number-one or number-two position in most of the markets in which it operates, with Albert Heijn in the Netherlands the group's most successful business unit, commanding about 35% market share. The company sports best-in-class free cash flow generation and has generally managed its expansion and operations prudently, with low levels of financial leverage and a strategy of financing its dividend and share buybacks using its ample free cash flow.

Koninklijke Ahold Delhaize released first-quarter results with sales up 5.8% (at constant currency) to EUR 18.3 billion, ahead of company-compiled consensus expectations of EUR 17.4 billion. Comparable sales growth was up 1.7% and 8.3% for the United States and Europe, respectively, versus down 1.4% and up 1.1% for consensus. Online sales growth across regions continued to be strong (up 188.3% and 103.3% in the U.S. and Europe, respectively), reflecting the group's resilience and solid presence in online as well as the long-lasting COVID-19 impact on consumer behavior. The underlying operating margin for the group was 4.6%, down 60 basis points versus last year, a function of tough 2020 comparables due to robust sales growth and operating leverage benefits that preceded significant investments related to the coronavirus to enhance pay and benefits, as well as extra costs associated with safety measures in stores.