Ahold, the Dutch retailer behind US chains Stop & Shop and Giant Food, said it is ready to “seize opportunities” for acquisitions or mergers and is monitoring developments closely.
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The company today (20 August) posted a drop in first-half profits, impacted “significantly” by discontinued operations.
Net income dropped to EUR391m (US$557m) from EUR599, while net sales were up 13.6% to EUR15.1bn.
Spokesperson Caro Bamforth, however, said the current economic situation and the company’s “high cash balance” may bring opportunities to complete fill in and bolt on acquisitions, or acquisitions further afield, to further expand the business.
“Having said that, we will not buy something just because we said so,” she added. “It has to make sense, add value to our shareholders longer term. We are monitoring any developments closely.”
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By GlobalDataIn a conference call today, CEO John Rishton said Ahold was “convinced” some more consolidation will take place in the industry.
“As I have said before, in a recession, the strong will get relatively stronger and the weak will get relatively weaker. We are one of the strong and we will seize opportunities that will inevitably arise in this kind of market. The recession has already shown this happen in banking and manufacturing.”
For the first half, net sales for the company’s Albert/Hypernova stores decreased 5.2% to EUR874m. Earlier this year Ahold announced plans to close 21 loss-making Albert stores and one Hypernova hypermarket in the Czech Republic in a bid to acquire finances for further investment into its remaining 280 stores.
The spokesperson told just-food that the business is in an “aggressive restructuring” stage, to create a firm basis for future profitable growth.
“The economic situation in that region is pretty bad, high unemployment, deflation and very fierce competition. We expect the restructuring to be completed by the end of the year. All planned store closures have been completed.”
She added that despite the recession, group volumes grew and the company gained share in its major markets.
“We performed well because we continued to give our customers what they want in these difficult times. We focused on value and on managing the balance between sales and margins – and maintained a tight grip on costs across the organization. That focus will continue in the third quarter.”
Ahold maintained it is on track to meet a EUR500m cost-savings target by the end of the year.
