The Dutch retail group Ahold Delhaize, which owns the Mega Image chain of stores in Romania, had a disappointing third quarter of 2023, a consequence of persistently high costs and low consumer confidence. However, the retailer is on the path to recovery in Europe, says CEO Frans Muller, as reported by RetailDetail.

Market share gains

While sales in the third quarter decreased by 2.1%, to 21.9 billion euros, the operating margin dropped to 3.8%, mainly due to higher costs in the United States. In Europe, this margin was 3.5%, and in the U.S., it was 4.2%.

Nevertheless, the retailer emphasizes that its market share is growing in key markets. Comparable sales growth was 3.1% for the group: 0.9% in the U.S. and 7% in Europe.

Online sales increased by 6.4% due to double-digit growth at Food Lion and Hannaford and a strong market share increase at Bol(.com).

In the U.S., lower emergency support, higher interest rates, and the resumption of student loan repayments in October affected consumer sentiment, explains Muller.

"When I look at Europe, which has faced more pressures in the last two years than the U.S., I am confident that we are on the path to recovery."

Excluding the impact of Delhaize's franchise plan in Belgium, comparable growth in Europe was 7.2%, and the margin exceeded the levels of the previous year. Albert Heijn and Bol gained market share in the Netherlands.

Shift in focus

Muller highlights three significant moves the retailer has recently made. The acquisition of Profi in Romania underscores Ahold Delhaize's confidence in the Central and South European region. By joining the Eurelec purchasing alliance, the group will address persistent price differences between European markets.

And a review of its online business in the U.S. led to the decision to sell the FreshDirect delivery service to Getir.

"Our greatest strength as a food retailer is the true omnichannel experience – a combination of online and in-store experience," said Muller.

The CEO added that Ahold Delhaize is currently aligning its priorities with the macroeconomic context and competitive landscape. This will require some changes in focus, he contends. The retailer promises more clarity on this matter at a Strategy Day in May 2024.