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Ahold Online Sales Exceeded EU1b for First Time in 2013

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Feb. 27 (Bloomberg) -- Royal Ahold NV said online sales exceeded 1 billion euros ($1.4 billion) for the first time last year and forecast further growth in 2014 as the company capitalizes on increasing demand for Internet grocery shopping.

Online revenue rose 17 percent to 1.09 billion euros on an identical basis, the Dutch owner of U.S. market leader Peapod said today in a statement as it reported a smaller decline in fourth-quarter earnings than analysts had predicted.

Ahold, the owner of Stop & Shop stores in the U.S. and the Dutch Albert Heijn chain, is targeting Web-based sales of 1.5 billion euros a year by 2016 as growing numbers of consumers turn to the Internet for their grocery shopping. The company sees growth of at least 10 percent in online revenue this year, Chief Executive Officer Dick Boer said on a conference call.

Ahold’s Web sales are “leading the pack” and now represent 3 percent of revenue, Bruno Monteyne, an analyst at Sanford C. Bernstein, said in a note.

Ahold rose as much as 4.9 percent to 13.94 euros in Amsterdam trading, the steepest gain since Aug. 22. The stock was up 3.8 percent at 10 a.m., leading the AEX Index.

Peapod, the biggest Internet grocer in the U.S., will expand the number of order collection points to 200 this year from the current 137, Boer said on the call.

Peapod and Dutch business albert.nl contributed to a 14 percent increase in online food sales to 596 million euros last year. Non-food sales rose 23 percent to 490 million euros, Ahold said, reflecting the growth of bol.com.

Profit Margin

Total underlying operating income fell 7.5 percent at constant exchange rates to 320 million euros, the Zaandam, Netherlands-based company said today. On average, eight analysts surveyed by Bloomberg estimated 303 million euros.

Ahold’s underlying operating margin in the U.S. narrowed to 4.0 percent in the fourth quarter from 4.3 percent in 2012, while the Dutch margin shrank to 5.5 percent from 6.1 percent.

For the first quarter of this year, the retailer expects a stable margin in the U.S., Chief Financial Officer Jeff Carr said on the conference call. The Dutch margin in the quarter should be “broadly in line with 2013,” he said.

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

Capital expenditure will be about 900 million euros this year, excluding takeovers, the company said.

Ahold said in January that 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

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