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Ahold Leads European Retailers Lower as Sales Disappoint

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Jan. 16 (Bloomberg) -- Royal Ahold NV, the Dutch owner of Stop & Shop and Giant stores, led shares of European retailers lower as reports from across the region showing higher holiday sales of food, clothing and electronics failed to impress.

Ahold slid as much as 3.8 percent, weighed down by U.S. sales that trailed estimates, while France’s Carrefour SA fell as much as 3.5 percent after reporting an unexpected decline in Chinese revenue. In the U.K., electronics retailer Dixons Retail Plc dropped the most in more than six months after increased sales weren’t sufficient to build on gains of recent weeks.

“There have been a couple of disappointments out of Europe this morning, with Carrefour and Ahold’s outlook for the U.S.,” said Andrew Gwynn, an analyst at Exane BNP Paribas in London. “Nothing shocking but just a bit disappointing around the edges and that’s dragging everyone down a bit.”

Retailers around the world remain under pressure as consumers seek value and ease of purchasing. European retailers with a strong online presence, lower prices and a compelling convenience proposition were better able to eke out growth over Christmas, according to today’s slew of sales reports.

Ahold, the owner of the Dutch Albert Heijn chain, was down 3.6 percent at 12.69 euros as of 2:36 p.m. in Amsterdam after saying U.S. identical sales excluding fuel dropped 2 percent. Growth of 0.7 percent in the Netherlands was mainly driven by its online grocery unit and bol.com, a general-goods retailer.

Meeting Estimates

“Ahold enters 2014 with some need to reverse market share slippage in both the U.S. and Holland,” Alastair Johnston, an analyst at Citigroup Inc., said in a note to clients.

Carrefour’s fourth-quarter sales met analysts’ estimates, with French same-store revenue rising 2.2 percent excluding petrol, led by growth at the company’s convenience-store formats. Still, a 3.1 percent drop in China was disappointing, according to Mike Dennis, an analyst at Cantor Fitzgerald.

Weak non-food sales weighed on the Chinese performance, the Boulogne Billancourt, France-based retailer said. The shares were down 3.1 percent at 27.43 euros as of 2:37 p.m. in Paris.

In the U.K., Dixons and online grocer Ocado Group Plc reported sales that beat estimates, while Associated British Foods Plc’s Primark chain said it had an “excellent” holiday.

Still, their shares also fell after rising in the weeks running up to their reports, according to Clive Black, an analyst at Shore Capital in Liverpool, England.

Optimism Tempered

“Today’s batch of retailers have shares that have largely performed very well in recent times, so some profit-taking today in the absence of material upgrade,” he said.

Ocado said sales rose 21 percent in the six weeks through Jan. 5, including growth of 29 percent in the week leading up to Christmas as more people bought their festive food online.

The online retailer tempered investor optimism by saying the retail climate remains “challenging and competitive.”

The shares rose 0.8 percent to 525 pence at 1:35 p.m. in London after falling as much as 4.6 percent earlier in the day.

Primark, whose low prices have made it a favored destination for U.K. shoppers, said quarterly sales rose 14 percent, meeting estimates.

Still, shares of Primark owner AB Foods fell 4.2 percent to 2,5582 pence at 1:39 p.m. after the company said a decline in profit at its sugar unit will be greater than previously expected, hurt by “unsustainably low” sugar prices.

Dixons, the U.K.’s largest electronics retailer, also slid even after the company reported a 5 percent gain in same-store sales in its domestic market, exceeding estimates.

New CEO

Chief Executive Officer Sebastian James said he’s “mindful that what recovery there is in the U.K. is still fledgling,” adding that the company continues to plan accordingly.

Dixons fell 5.7 percent to 47.55 pence at 1:41 p.m. in London.

Home Retail Group Plc, the owner of the Argos and Homebase chains, outperformed the market leader in electrical products over Christmas, Chief Executive Officer Terry Duddy said today.

Argos’s 18-week sales rose 3.8 percent, which was the strongest growth in 10 years, Duddy said. The chain benefited from a shift toward ordering from mobile devices, with sales from that channel up 75 percent from a year earlier.

Home Retail rose 1.9 percent to 204.9 pence at 1:40 p.m.

The company also named Argos head John Walden as Duddy’s successor as CEO following a four-month search. Walden, who joined just under two years ago, will take over on March 14.

Christmas for most retailers was “decent -- I wouldn’t say great,” said Gildas Aitamer, an analyst at Planet Retail.

To contact the reporters on this story: Paul Jarvis in London at pjarvis@bloomberg.net; Gabi Thesing in London at gthesing@bloomberg.net

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