In Q3, Ahold Delhaize focused on profitability by optimizing stores, advancing fulfillment strategies, and enhancing customer experiences. Key moves include completing underperforming store closures and boosting omnichannel capabilities to drive efficiency and growth.

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Q3 Performance Highlights Strategic Initiatives Future Outlook
 

Ahold Delhaize, the food retailer, reported a slight year-over-year decline in Q3 net sales, totaling €13.5 billion. The drop was attributed to the July 2024 closure of 32 Stop & Shop stores and the recall of Boar’s Head meat products.

In the U.S., same-store sales saw a boost from pharmacy sales driven by favorable calendar timing and weather conditions. However, the divestment of FreshDirect created a significant headwind, reducing online sales by 15.4 percentage points. Despite these challenges, the company continues to focus on optimizing its operations and enhancing customer experiences.

Key Highlights

  • Emphasis on store optimization and advanced fulfillment strategies to improve operational efficiency.
  • Completion of 32 underperforming Stop & Shop store closures, impacting Q3 sales.
  • Investments in omnichannel capabilities to enhance customer experiences and scalability
  • Streamlined fulfillment processes, leveraging partnerships and technology for faster, accurate deliveries
 

‍E-commerce Profitability

Ahold Delhaize has seen significant growth in overall group sales, driven by improvements in omnichannel infrastructure. However, the U.S. segment experienced a slight decline in online sales, primarily due to the divestment of FreshDirect. Despite this, Food Lion achieved double-digit online growth, fueled by technological innovations.

Food Lion, Ahold Delhaize’s best-performing U.S. banner, continues to lead with 48 consecutive quarters of positive sales growth, showcasing the strength of its operational strategy.

Optimizations in the U.S. fulfillment model and a partnership with DoorDash contributed to a 40% increase in e-commerce orders in Q3 compared to Q2. The company also added more than 70 pickup locations over the past year. According to Grocery Doppio, achieving e-commerce profitability remains challenging due to high operational costs for picking, packing, and delivery. To address this, grocers must integrate e-commerce as a core part of the customer experience and rethink fulfillment processes to boost profitability

Remodeled Omnichannel Stores 

Stop & Shop plans to close 32 underperforming stores by year-end while focusing on organic growth and remodeling efforts across the U.S. A key example is the flagship Stop & Shop in Allston, Boston, which opened in June. The store highlights an expanded produce section featuring local fruits and vegetables and a curated selection tailored to the area's diverse cultures. These initiatives align with the company’s growth strategy, emphasizing customer value through competitive pricing and targeted promotions.

In line with its commitment to enhancing operations, Food Lion completed its 167-store remodeling program in the Raleigh-Durham market, introducing its latest omnichannel concept to one of the brand's largest regions. These efforts underscore Ahold Delhaize’s broader goal of strengthening its presence through modernization and customer-focused investments.

The store closures reduced Ahold Delhaize’s third-quarter sales by $38 million, with the company incurring a $136 million pretax charge related to the closures, CFO Jolanda Poots-Bijl shared during the earnings call.

 

Future Outlook 

Looking ahead, Ahold Delhaize anticipates a $600 million reduction in U.S. segment sales due to the divestment of FreshDirect. To counterbalance this, the company is focusing on enhancing its omnichannel capabilities and advancing healthy and sustainable initiatives.

The closure of 32 underperforming Stop & Shop stores, completed in early November, is expected to have an additional net impact of $100 to $125 million on 2024 reported net sales. These strategic adjustments reflect the company’s efforts to streamline operations while investing in areas poised for growth and innovation.CFO Jolanda Poots-Bijl shared during the earnings call that the store closures reduced Ahold Delhaize’s third-quarter sales by $38 million, and the company incurred a $136 million pretax charge related to the closures.