Ahold Fourth-Quarter Earnings Beat Analysts' Estimates

Royal Ahold NV (AH), the Dutch owner of Stop & Shop and Giant stores, said fourth-quarter underlying operational income fell less than analysts expected as sales in the Netherlands increased.

Underlying operational income fell 7.5 percent at constant exchange rates to 320 million euros ($438 million) from 355 million euros a year earlier, the Zaandam, Netherlands-based company said in a statement today. On average, eight analysts surveyed by Bloomberg estimated 303 million euros.

“In the fourth quarter, our sales remained broadly flat at constant exchange rates, adjusted for the impact of Hurricane Sandy in 2012 and VAT from tobacco sales in the Netherlands in 2013, reflecting a low level of inflation and pressure on volumes,” Chief Executive Officer Dick Boer said in the statement.

Retailers around the world remain under pressure as consumers seek out value and ease of purchasing. Ahold therefore is trying to sell more online in both the U.S. and Netherlands. In the U.S., the company added 31 pick-up points to 120 in total in the fourth quarter, it said in January. The company then also said its Dutch net sales growth of 0.7 percent was mainly driven by the strong performance of its online businesses albert.nl and bol.com.

“Our ongoing focus on expanding our online businesses is expected to continue to result in strong sales growth,” Boer said in the statement.

Falling Margins

Due to the global pressure retail margins are narrowing. Ahold’s underlying operational margin in the U.S. dropped to 4.0 percent in the fourth quarter from 4.3 percent in 2012, while the company’s Dutch margin fell to 5.5 percent from 6.1 percent.

The company said it expects a gradual improvement in economic conditions, though it remains “cautious” in the outlook for retail in 2014.

The company expects capital expenditures of around 900 million euros, excluding takeovers, this year.

In January the company said fourth-quarter sales fell 4.2 percent to 7.47 billion euros.

To contact the reporter on this story: Elco van Groningen in Amsterdam at vangroningen@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.