Ahold Sales Rise Despite Tougher US Conditions
Dutch supermarket group Ahold posted a forecast-beating rise in fourth-quarter sales on Friday, helped by favorable markets in Europe which offset tougher economic conditions in the United States.
Shares in Ahold rose 5 percent after the Amsterdam-based company reported that sales rose to 6.61 billion euros ($9.7 billion) from 6.6 billion a year ago, above an average forecast of 6.46 billion euros in a Reuters poll of 16 analysts. Revenues were up 6.5 percent at constant exchange rates.
Ahold reiterated that a revamp of its U.S. stores which is now underway would continue to hurt margins.
"The numbers are very good. What is important is that momentum in the United States is going good," said SNS Securities analyst Richard Withagen.
The owner of the Netherlands' biggest supermarket chain, Albert Heijn, derives 60 percent of its sales from the United States where it operates the Stop&Shop, Giant-Landover and Giant Carlisle chains.
"In Europe, market conditions were favorable. In the United States, the turbulent economic environment did not have a significant impact on local market conditions," Ahold said in a statement.
Falling consumer confidence has hurt U.S. grocers, prompting both Supervalu and Family Dollar Stores to cut their full-year earnings forecasts earlier this month.
Ahold, the world's seventh largest retailer by sales, said it expects to reach the higher end of its 4-4.5 percent 2007 total retail operating margin. It will announce annual results on March 6.
Ahold said identical sales excluding gasoline at its main U.S. chain Stop&Shop grew 1.2 percent. Giant-Landover reported a 0.5 percent fall in identical sales, hurt by lower pharmacy sales while Giant-Carlisle was up 3.8 percent.
Albert Heijn outperformed as it boosted same-store sales by 9.3 percent, beating analysts' average forecast of a 6.7 percent rise.
A warning that a two-year overhaul of its U.S. stores in 2006, which includes lower prices, more private label products and greater varieties, would continue to weigh on margins was old news, said SNS's Withagen.
"It is standard in their trading updates. It is all discounted," he said.
Ahold's stock closed 2 percent higher.