Ahold has insisted that it is optimistic about its growth prospects this year, despite the continuing challenges presented by an unfavourable consumer environment.
The Dutch retailer today (4 March) posted a 7.9% increase in operating income, which rose to EUR1.3bn (US$1.77bn), on sales that increased by 3.9%.
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Speaking to analysts during a conference call, chief executive John Rishton said the company had performed well in conditions that have seen steep deflation and consumers trading down, notably in the US.
“I don’t see any significant improvement in the short-term environment. I expect unemployment and underemployment will remain relatively high,” he predicted.
Nevertheless, Rishton said that he hoped to see the “opposite” cycle develop in 2010 as “conditions improve throughout the year”.
Ahold said that it intended to take advantage of expansion opportunities in the coming year, including through possible acquisitions.
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By GlobalDataNevertheless, Rishton insisted that Ahold’s strong balance sheet and cash reserves were not “burning a hole” in his pocket.
“We will take our time. We will make acquisitions in a structured way, in a sensible way,” he insisted.
Excluding acquisitions, Ahold has targeted identical-store sales growth of “plus 5%”. This, management revealed, will be driven by expansion into new formats, categories and markets.
In the US, Ahold’s Giant division will continue to develop its new Giant to Go convenience concept, with further store openings likely in the coming 12 months.
Meanwhile, in the Netherlands, Ahold’s Albert Heijn business is expanding its non-food product offering to meet the “daily needs” of consumers in categories such as “sleeping and dressing”, “working and playing”, “cooking and living” and “watching and reading”.
However, Rishton insisted that this move would not detract from the strength of its core food offering.
“We will not increase space allocated to non-food… we will not be reducing our food offering or the space dedicated to it,” he insisted.
Ahold also intends to expand its reach through online retailing, which it has identified as a “considerable opportunity” in Europe and the US.
In Europe, Ahold also hinted at geographic expansion and indicated that it is mulling entering the retail market in neighbouring Belgium.
Dick Boer, COO for Ahold Europe and CEO of Albert Heijn, said that the company’s stores located near to the border were benefiting from “cross-border shopping”, proving the popularity of its range and pricing, with Albert Heijn prices about 10% lower than Belgian peers.
Logistically, the move makes sense because Ahold trucks are already driving through Belgium to service stores in the southern part of Holland, Rishton said.
However, Ahold is yet to establish a timetable for its expansion into Belgium, in part due to the difficulties of securing real estate in the country, he added.
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