Dutch retailer Royal Ahold today (9 May) posted a 1.3% drop in first-quarter sales thanks to the impact of the weak US dollar and a price-cutting policy at its US stores.
Net sales in the quarter dropped to EUR7.5bn (US$14.7bn), down from EUR7.6bn posted for the first quarter of last year. However, at constant exchange rates, sales rose 6.8%, the company said.
Ahold’s stores include Albert Heijn in the Netherlands and Stop & Shop and Giant-Landover in the US.
At Albert Heijn, sales increased 13.5%, rising to EUR2.7bn, while net sales in the US were up 1.3% to US$5.1bn. Excluding gasoline, same-store sales at Stop & Shop were up 0.2% while same-store sales dropped 1.6% at Giant.
However, when translated into euros, net US sales dipped 11.6%.
The company is part-way through a turnaround program designed to boost profitability.
In 2006, Ahold launched an overhaul of its US operations with the aim of growing sales. The group has since slashed prices and haulted temporary product promotions. It is believed that lower prices and a lower cost base will lead to higher sales and improved margins. This strategy proved successful in the turnaround of its Albert Heijn supermarkets in the Netherlands.
Ahold told just-food that lowering prices has marginally dented its performance.
“We have been cutting US prices and it may take some time before this leads to increased sales. The programme is on-track and performing in line with expectations,” a spokesperson for the group said.