Two of the Mid-Atlantic region’s largest chains – the banners that comprise Ahold Delhaize USA and Weis Markets – experienced flat sales and earnings in their second quarters, which both ended on June 29. Both chains’ results reflect the challenges most retailers are now facing with lower inflation and cautious consumer spending.
At Ahold Delhaize USA (ADUSA), U.S. net sales declined 1.5 percent to ($14.8 billion) and comp sales (ex-gas) dipped 0.4 percent. The Zaandam, Netherlands-based retailer said that strong pharmacy sales were offset by moderating inflation rates, lower gas sales, and the divestiture of its FreshDirect online delivery business (to Getir). The sale of FreshDirect will reduce the amount of 2024 reported net sales and online sales for the U.S. segment by $600 million, the retailer noted.
Overall, online sales decreased 2.9 percent; however, the Giant Company, Food Lion and Hannaford posted double-digit digital gains for the quarter. As it’s been recently, those latter two banners continued to be the best performers in the U.S. with Food Lion producing its 47th consecutive quarter of positive comps and Hannaford amassing its 12th straight period of higher comparable store revenue.
On the earnings front, underlying operating margin in the U.S. was 4.7 percent, up 0.1 percentage points due to increased vendor allowances and the benefit from cost savings initiatives implemented over the past 12 months, including the divestment of FreshDirect. This was partially offset, the company said, by higher store labor and hired service costs and lower sales leverage.
While Ahold Delhaize’s numbers might be viewed by some as disappointing, CEO Frans Muller remained optimistic. “Excluding the impacts of calendar shifts and the divestment of FreshDirect, we saw a sequential improvement in growth rates during the quarter, as volume trends continued on a positive trajectory,” said Muller. “By putting increased attention on the value of own-brand products while making it easier to earn loyalty rewards, the U.S. brands are laser-focused on investing in our winning customer value proposition.”
Also mentioned in the financial report was the impact of its announcement last month that 32 Stop & Shop stores would be closing by November. Ahold Delhaize estimates that would reduce sales between $100 million and $225 million in fiscal 2024 and between $550 million and $575 million next year.
At Sunbury, PA-based Weis Markets, its financials produced a similar trend. For its 13-week Q2 the regional chain’s net sales were $1.18 billion, a marginal 0.2 percent gain from last year. The company estimated that its net sales were negatively affected by $14.0 million, or 1.2 percent because of the Easter holiday occurring in Q1 of 2024 compared with Q2 in 2023.
In a statement, Weis said comparable store sales rose 0.5 percent on an individual year-over-year basis and increased 4.0 on a two-year stacked basis.
The Mid-Atlantic food retailer’s net profit totaled $26.26 million, compared with $34.27 million in 2023, a dip of 23.4 percent.
“Our second-quarter 2024 results, which were negatively impacted by the Easter holiday shift, are in line with our expectations despite an extremely challenging market environment marked by continuing customer caution,” noted Weis Markets Jonathan Weis, the company’s chairman president and CEO.
Weis added that the grocer increased its price investments in Q2 by lowering the prices on 600 high-demand dairy items as part of the expansion of its “Low Low Price” program.
“We also continue to invest in our Weis Rewards loyalty marketing program, which now offers an increased array of fuel and retail product savings to our customers,” Weis explained.
During Q2, Weis opened a new Gas N’ Go Fuel Center at its Lock Haven, PA store and completed major remodels at its Hagerstown, MD and Lebanon, PA supermarkets. Additionally, the closely-held publicly-traded retailer celebrated its first groundbreaking since 2020 in New Market, MD, the site for its Lake Linganore store, one of six new units Weis has planned over the next few years in Maryland and Delaware
For the first 26 weeks of fiscal 2024, net sales totaled $2.36 billion, compared with $2.32 billion for the same period in 2023, up 1.6 percent. Year-to-date comps increased 1.8 percent on an individual year-over-year basis and increased 5.1 percent on a two-year stacked basis.
The company’s year-to-date net income totaled $49.42 million, compared with $60.08 million in 2023, declining 17.7 percent.
