Despite Solid Results, Ahold’s Boer Concerned With Market Conditions

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Ahold chief executive Dick Boer told shareholders at the international retailer’s annual meeting that the company delivered another good year of financial performance, despite challenging market conditions and continued low consumer confidence.

The supermarket chain’s General Shareholder’s Meeting (AGM) was held April 17 in Amsterdam, the Netherlands. Boer began his comments by expressing sadness over the Boston Marathon attack and pledged Ahold’s support to the local community (Ahold USA’s Stop & Shop unit said it will contribute $500,000 to the One Fund set up to help victims of the attack).

Boer reported that Ahold delivered another year of good financial performance in 2012, despite challenging market conditions and low consumer confidence. Ahold’s net sales rose 3.5 percent (at constant exchange rates), operating income was 1.2 billion euros ($1.56 billion) and underlying operating margin was 4.3 percent.

Boer stated, “In this environment, we were able to gain market share once again in all of our major markets.” The veteran Ahold executive also reviewed the highlights of the company’s “Reshaping Retail” strategy for driving the company’s growth through its six strategic pillars, launched in 2011, saying, “…I am pleased to tell you that our strategy is working.” Boer addressed the retailer’s expansion activities of 2012, noting the first Peapod pick-up points in the U.S. and the acquisition of online retailer bol.com that allowed Ahold to add pick-up points for online shoppers in Europe as well. He told the gathering, “We achieved double-digit online sales growth in 2012.”

He also highlighted the successful addition of 15 Genuardi’s stores to the Giant/Carlisle banner as well as the addition of 82 stores that were converted to the Albert Heijn banner in the Netherlands and four new stores in Belgium.

Another aspect of Ahold’s business Boer discussed was cost reduction as an important factor of its growth strategy, reporting that the retailer has increased the target for 2012-2014 by nearly 50 percent. He cited the fact that the company’s U.S. divisions have successfully reduced inventory levels significantly with no adverse impact on customers’ shopping experience.