Like a number of retailers we’ve seen recently, Ahold appears to have also seen some increased market pressure during the first quarter of 2014. The company is reporting net profits at €50 million ($68.2 million) compared to €1.95 billion a year earlier, or a 97% drop due to the large gain last year following the sale of its stake in Swedish retailer ICA, according to a press release.
“First quarter sales trends were similar to the previous quarter with a flat year-on-year performance, impacted by low inflation and volumes that remained under pressure in all our markets,” said Ahold CEO Dick Boer.
Jeff Carr, Ahold’s CFO, says that the low inflation and soft volumes reflects the customers, who continue to look for value and are careful about their household income. Take a quick look at what he had to say about the first quarter below.
Underlying operating income also fell more than analysts had anticipated due to low inflation and continued market pressure. Underlying operational income fell 4.0% to €392 million ($534 million).
Looking ahead, Ahold will continue to make investments in the quality and merchandising of its Fresh assortment, associate training, and targeted price reductions in all of its divisions to further strengthen its position. This program was piloted in the second half of 2013, resulting in encouraging volume uplifts. Ahold’s online presence in the United States and Netherlands will also continue to expand over the coming quarters, with online sales up over 20% on an identical basis.
“Our outlook for the next quarter reflects similar trading conditions to the first quarter as well as investments in our customer proposition and future growth,” concluded Boer.
What can we expect from Ahold’s continued investments online, and how will the retailer’s new program improve sales in the next quarter?
Stay tuned to AndNowUKnow as we keep an eye on Ahold’s performance as the fiscal year continues.
