As Ahold posted flat third quarter sales that were held back by competition in the US, rumours have surfaced that the Dutch retail giant is planning to announce the sale of US Foodservice operations and Central European supermarket businesses on Monday (6 November).
Ahold, the world’s fourth largest retailer by sales, today posted consolidated net sales of EUR10.3bn (US$13.14bn) for the third quarter, an increase of 0.7% over the comparable period of last year.
When Ahold previously delivered its second quarter results, the company said that it expected conditions to be challenging in the second half of the year. The third quarter has felt the impact of challenging conditions in the US, reflecting increased competition an weaker economic conditions. This has put pressure on the company’s US margins, a market that accounts for 74% of the company’s total turnover.
In the US, Ahold operates stores trading under the Stop& Shop / Giant-Landover banners, where net sales increased 2.1% to $3.7bn and comparable-store sales decreased 1.3% at Stop & Shop and 0.5% at Giant Landover. The company also operates the Giant-Carlisle and Tops chains, where net sales increased 0.3% to $1.4bn and comparable store sales increased by 7.2% at Giant-Carlisle but decreased 5.7% at Tops.
In the retailer’s home market, Ahold’s flagship chain Albert Heijn’s net sales rose 10.6% to EUR1.5bn, while total sales in the market increased 10.3% to EUR1.6bn.
The company’s operations in Central Europe posted a net sales decline of 2.5% to EUR423m, with identical sales in the arena dropping 6.1%.
Ahold’s US Foodservice business, which investors have been pushing management to sell-off, posted a sales increase of 5% to US$4.5bn.
Dutch financial daily, Het Financieele Dagblad, has reported that the company plans to announce the intended sale of its US Foodservice division and underperforming Polish and Slovak supermarkets on Monday, when it is scheduled to announce the outcome of a strategic review.
Potential buyers are said to include US private equity company Clayton Dubilier & Rice (CD&R) and South African investment firm Bidvest, with CD&R believed to be the frontrunners.
Analysts have valued the sale at around EUR4.5bn, which will likely be used to reduce debts, modernise its US supermarkets and finance a round of share buybacks.
When contacted by just-food, Ahold declined to comment on market speculation and rumour, but did concede that the review would examine Ahold’s portfolio with an eye to cutting costs.
Ahold shares were marginally up in morning trade today, rising 0.24% to EUR8.35 at time of press.