Despite being domiciled in the Netherlands and reporting in euros, some 62% of Ahold’s sales come from the US. So the fall in revenues from the States was a major drag on group sales in the first quarter.

In the States

Lower gasoline revenues were the principal driver behind falling US sales: excluding gas, net sales rose 0.4% at constant exchange rates and comps nudged up by 0.1%. The company claimed that this performance represented a gain in market share by volume, although share was flat in value terms. In the States, Ahold said it is has been absorbing some cost inflation in food as it seeks to sharpen its value credentials. This hit US operating margins by 0.2 percentage points in the quarter. The second phase of Ahold USA’s investment in price will be the rollout of “Super KVIs” by the end of next year. This will focus further pricing investment on a small range of known value items (KVIs). But it’s not just about price. The third wave of the ‘Project Thunder’ overhaul will be investment in new fresh produce departments. And this is likely to resonate with the apparent heightened demand for quality fresh foods among American shoppers. As we noted in our recent Global Grocery Retailing report, US consumers seem to be putting a greater emphasis on quality and freshness. Kroger, for instance, has performed strongly in the recent past, having built a reputation on quality private labels including a substantial organic range; and Walmart and Target are now adding more fresh, natural or organic foods to their offer. So the move to bolster fresh produce is likely to prove popular, though with its rivals thinking along similar lines it may not give Ahold much of a competitive edge. The US operation includes the Peapod home-delivery services, and this looks to have been underperforming. On the conference call today, the company said it was “disappointed” by its “single-digit” growth. Capacity constraints had held back Peapod in the quarter, with the slowing of a rollout to new zip codes holding back growth. The company said it expects to see a better growth performance from Peapod, and in a fast-growing e-commerce market many will have similar expectations.

In the Netherlands

In the Netherlands, meanwhile, Ahold grew comps by 2.5%, a strong performance in a sector that grew less than 2% in the first three months of the year. Nonfood promotions at Albert Heijn stores helped, while a 20% increase in online sales, including at the non-food Bol.com operation, provided a further bolster to the top line. Margins slipped back 0.6 percentage points due to the promotional activity.