Ahold chief executive Dick Boer told shareholders at the international retailer’s annual meeting that the company delivered another good year of financial performance, despite challenging market conditions and continued low consumer confidence.
The supermarket chain’s General Shareholder’s Meeting (AGM) was held April 17 in Amsterdam, the Netherlands. Boer began his comments by expressing sadness over the Boston Marathon attack and pledged Ahold’s support to the local community (Ahold USA’s Stop & Shop unit said it will contribute $500,000 to the One Fund set up to help victims of the attack).
Boer reported that Ahold delivered another year of good financial performance in 2012, despite challenging market conditions and low consumer confidence. Ahold’s net sales rose 3.5 percent (at constant exchange rates), operating income was 1.2 billion euros ($1.56 billion) and underlying operating margin was 4.3 percent.
Boer stated, “In this environment, we were able to gain market share once again in all of our major markets.” The veteran Ahold executive also reviewed the highlights of the company’s “Reshaping Retail” strategy for driving the company’s growth through its six strategic pillars, launched in 2011, saying, “…I am pleased to tell you that our strategy is working.” Boer addressed the retailer’s expansion activities of 2012, noting the first Peapod pick-up points in the U.S. and the acquisition of online retailer bol.com that allowed Ahold to add pick-up points for online shoppers in Europe as well. He told the gathering, “We achieved double-digit online sales growth in 2012.”
He also highlighted the successful addition of 15 Genuardi’s stores to the Giant/Carlisle banner as well as the addition of 82 stores that were converted to the Albert Heijn banner in the Netherlands and four new stores in Belgium.
Another aspect of Ahold’s business Boer discussed was cost reduction as an important factor of its growth strategy, reporting that the retailer has increased the target for 2012-2014 by nearly 50 percent. He cited the fact that the company’s U.S. divisions have successfully reduced inventory levels significantly with no adverse impact on customers’ shopping experience.
Ahold continues its work to improve its “own-brand” products and Boer told the audience that Ahold U.S. businesses are “…on track to build own-brand penetration here to a target of 40 percent by 2016. Last year, the divisions reformulated one in five own-brand products to meet higher quality standards.” He added that sales of Guaranteed Value own-brand range are up almost 20 percent.
Boer addressed the importance of having great employees and said that Ahold strives for workplaces built on “fairness and mutual respect.” He stressed that the retailer is committed to maintaining constructive relationships with labor unions in the markets where the retailer’s employees have chosen union representation, highlighting the new contract that Stop & Shop’s New England division recently agreed to with the Teamsters union covering its Massachusetts distribution center. He also noted the successful collective bargaining agreements Stop & Shop agreed to with five UFCW Locals in New England that found solutions to the new U.S. health care law changes set to take place in 2014.
Boer also addressed the company’s outlook for 2013, noting that Ahold expects to double its store count in Belgium and will continue to roll out pick-up points in the U.S. and the Netherlands. “We know we can’t change the environment we’re operating in, but we’re well positioned to respond to it, as you’ve seen in our 2012 performance. We have the right strategy in place, and we will keep delivering on it in 2013,” he said.
In other business at the AGM, shareholders adopted Ahold’s 2012 financial statements and determined the dividend over 2012 at 0.44 euros per common share. Additionally, shareholders adopted all other proposals on the agenda including appointments and reappointments to the company’s supervisory board.
