Ahold Fourth-Quarter Profit Falls Short of ExpectationsJulie Cruz
Royal Ahold NV, the Dutch owner of the U.S. Stop & Shop chain, said it will start a buyback of 500 million euros ($657 million) after reporting profit that fell short of analysts’ expectations.
Fourth-quarter net income fell to 158 million euros from 270 million euros a year earlier as it took a writedown of 88 million euros for software related expenses, the Amsterdam-based company said in a statement today. Analysts expected net income of 265 million euros, according to the average of eight estimates compiled by Bloomberg.
“We remain cautious in our outlook for 2013,” Chief Executive Officer Dick Boer said in the statement. “We will stay focused on simplifying our business to reduce costs.”
Under Boer, Ahold is pushing sales growth online, adding pick-up points for commuters to grab ordered groceries in Europe and the U.S. and expanding internet retailer Bol.com. The company hopes to triple online sales to 1.5 billion euros by
He’s also focusing expansion on businesses the company controls, which led to the disposal of its stake in Sweden’s largest food retailer ICA this month for $3.1 billion. Ahold added stores in the Netherlands via the purchase of shops from C1000 and Jumbo and acquiring Genuardi outlets in the U.S. The Dutch retailer may be interested in Harris Teeter Supermarkets Inc., people with knowledge of the matter said last week.
Fourth-quarter underlying operating income rose 4.1 percent to 355 million euros, beating the 344 million-euro average estimate of eight analysts compiled by Bloomberg. Operating margin fell to 4.5 percent from 4.7 percent in the year-earlier period.
“We expect Ahold’s margins will continue to be pressured in 2013,” John Kershaw and Andrew Gwynn, analysts at Exane BNP Paribas, wrote in a report on Feb. 25. “It faces currency headwinds the U.S.-listed peers do not and Ahold’s earnings momentum is inferior to its U.S. quoted peers. We struggle to see the investment attraction given the relative pressure on Ahold’s profits.”
Sales rose 7.5 percent to 7.8 billion euros in the fourth quarter, led by stronger U.S. sales than some analysts anticipated, Ahold said in January.