ZAANDAM, THE NETHERLANDS - Ahold has released its Q4 2014 and fiscal year 2014 financial report. While operating income in the U.S. was down 4.7% to $222 million in the quarter, it was up 9.3% for the year to $965 million.
Following the release of its financial report, Ahold has also revealed it will be implementing the third phase of its “Project Thunder” transformations. Phase 3 will be focused on a comprehensive revamping of produce departments at its U.S. stores with a goal of improving produce sales by 3% to 5% at renovated locations.
“This program is about becoming better on value, and becoming better on quality and service. It’s a complete transformation on how we go to market on produce,” James McCann, COO of Ahold, told analysts.
Changes being made under “Project Thunder” include:
- New market style layout
- New fixture lighting
- New signage and layout
- Bolder pricing statement
- New training and schedule for staff
- New “Would I Buy It” (WIBI) quality assessment program
Speaking on Ahold’s new “Would I Buy It” assessment program, McCann added, “If we wouldn’t buy it ourselves, then we’re training our staff to say, don’t try and sell it to our customers. Take it off sale. Because the most important thing for customers on produce is the quality of the produce itself.”
The company says it plans to deploy to over 700 stores by 2016, at a cost of between $160,000 and $200,000 dollars per store, and will probably deploy at all the stores by Q3 next year.
“We’re getting strong sales and volume growth. We’ve had an impact on our customers’ perception, which I’ve not seen before,” McCann includes. “Customers are giving us outstanding marks in terms of the transformation of this department. We will have deployed it to 87 stores on the industrial test by the end of April. We’re currently at about 50 stores and it’s deploying at about the rate of 3-4 per week.”
Returning to the financial report, Ahold CEO Dick Boer said, ”In the fourth quarter, we reported a strong sales performance, reflecting a positive currency impact as well as improvements in underlying sales trends, both in the United States and in the Netherlands. Our underlying operating margin was stable versus the previous two quarters, adjusted for the SPAR acquisition. Free cash flow generation during the quarter was strong, with [$686 million] compared to [$543 million] last year.
You can watch Ahold's Q4 and year in review report at the link below:
Other highlights from Ahold’s financial report include:
- Underlying operating margin of 3.7%; excluding the impact of the SPAR acquisition, stable versus prior two quarters at 3.9%
- Simplicity program 2012-2014 achieved $968 million; new target for 2015 of $392 million
- Strong free cash flow in Q4 resulted in full-year free cash flow of $1.1 billion
- Dividend increased by 2.1% to $0.54 per share
- New $559 million share buyback program over the next 12 months
Stay tuned to AndNowUKnow for continued updates on Project Thunder and as we continue to bring you the latest financial news and analysis from the fresh produce industry.
