Shares of Royal Ahold Delhaize, the Dutch grocer, experienced a decline in early trade following the company’s announcement of a third-quarter profit fall that fell short of consensus estimates. Despite this, the company also revealed plans for a new share buyback.
Net Profit and Impairment Charges
Ahold’s net profit for the quarter dropped to €394 million ($421.6 million), as opposed to €589 million from the same period last year. This figure also fell below the company’s estimated net profit of €590 million. The decline can be attributed to a €153 million impairment charge related to FreshDirect in the U.S., which Ahold has agreed to sell to Getir, and €61 million of restructuring costs associated with the transformation of Ahold’s operations in Belgium and other initiatives.
Delhaize Belgium Store Transitions
During the quarter, 51 Delhaize Belgium stores signed agreements with independent buyers and began transitioning to new operators. The first stores completed their transition in October.
Losses from Sale of FreshDirect
Furthermore, Ahold expects to book a pretax loss ranging from $275 million to $325 million in its accounts from the sale of FreshDirect, which is anticipated to be finalized in Q4 of this year.
Net Sales Performance
Net sales totaled €21.93 billion for the quarter, compared to €22.41 billion in the previous year. This fell slightly below the consensus estimate of €21.95 billion. U.S. sales saw a small increase of 0.5%, amounting to €13.625 billion, while European sales rose by 7.1% to reach €8.31 billion.
Revised Free Cash Flow Target
Ahold Delhaize has revised its free cash flow target for 2023, increasing it to a range of €2.2 billion to €2.4 billion from the previous range of €2.0 billion to €2.2 billion.
Share Buyback Program
The company has outlined a share buyback program worth €1 billion, scheduled to commence at the beginning of 2024.
Future Plans and Strategy Day
President and CEO Frans Muller stated that the company plans to recalibrate its priorities in response to the macro and competitive environment. Ahold Delhaize will hold a strategy day in May next year to present the board’s plan for the next phase of growth and value creation.
