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Ahold suffers margin squeeze in US, Netherlands

Dutch supermarket chain Ahold posted a first-quarter operating profit below analyst expectations, as margins fell in the United States and the Netherlands, the group's main markets.

Operating income, adjusted for one-off factors, fell 6.2 percent in the first quarter to 392 million euros ($533.69 million), just below the 399 million expected in a Reuters poll.

Ahold, which makes about 60 percent of its revenue in the United States where it operates the Giant and Stop&Shop supermarkets, said U.S. like-for-like sales rose 0.1 percent excluding fuel, after rising 0.3 percent in 2013.

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ROYAL AHOLD EARNS
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Operating margins fell to 3.9 percent, versus 4.1 percent in 2013, as input costs rose faster than retail prices and the group introduced a new range of fresh goods.

Belgian peer Delhaize, with an equally large U.S. arm, reported a 4.6 percent increase in comparable sales in the first quarter, while Wal-Mart Stores said comparable sales in the period were broadly flat.

In the Netherlands, where Ahold's Albert Heijn chain is the market leader, like-for-like sales fell 1.4 percent after a 0.6 percent rise in 2013. Margins also fell to 5.0 percent from 5.4 percent.

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The group said the fall in the Netherlands was mainly caused by frugal customers buying fewer groceries per visit.

Ahold said it expected trading conditions to remain similar in the second quarter of the year, with margins falling further in the United States as the group invested in new offers.

The group added it hoped to realize 300 million euros of cost savings in 2014.