The Netherlands-based retailer Ahold, which owns U.S. Stop & Shop stores, reported second-quarter results today, revealing a sizable drop in sales and profits, pressuring shares down some 2%.
Q2 sales dropped 14% on an annual basis to €7.42 billion (~$9.86bn), while net profits were down 29% to €147 million. The operating margin declined to 3.9%, for an operating income of €288 million, from 4.4% a year ago, with a 14% drop in the US income, which generates 60% of the companys revenue.
“It was not an easy quarter,” CEO Dick Boer said. “In a challenging competitive environment, we remain focused on executing our Reshaping Retail strategy and continue to make investments in our customer and value offering, making our stores a better place to shop.”
Same-store sales in the US dropped 1.8% on an annual basis, while in the Netherlands, where Ahold is the market leader, comparable sales were down 1.7%.
The retailer explained poor results with a generally sluggish demand in key regions and mounting competition.
CEO Boer said that the company is pressing on with its “Reshaping Retail” strategy, improving services and modifying its product range. A growing share of internet-sales, which now account for 3.7% of total revenue, is to be expanded and strengthened.
Boer also said acquisitions were on the table, and Ahold will pursue lucrative deals on supermarkets and convenience stores purchases.
Koninklijke Ahold NV lost 2.09% to trade at €12.88 per share by 8:50 GMT, marking a one year change of +5.54% and valuing the company at €11.77bn (~$15.64bn). According to the Financial Times, 24 analysts offering 12 month price targets for Koninklijke Ahold NV have a median target of €13.90, with a high estimate of €17.50 and a low estimate of €11.00.
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