Ahold Delhaize plans new Fresh Kitchen innovation center

Ten days with Stop & Shop on strike cost Netherlands-based Ahold Delhaize $345 million, but high performance in other areas kept the company upbeat about its second quarter earnings.

During the quarterly earnings report held Aug. 7, Frans Muller, president and CEO of Ahold Delhaize said while the April strike overshadowed the quarter, “we expect no significant impact from the strike in the second half of the year.”

That’s due, in part, to 27 consecutive positive quarters at Salisbury, NC-based Food Lion and strong performance at remodeled Stop & Shop stores in the Hartford division.

Same-store sales were up 0.2% in the quarter for the company. That rose to 2.3%, excluding the strike and subsequent recovery period.

Food Lion continues to implement a new Easy, Fresh and Affordable strategy, and has remodeled close to 80% of its 1,000-store footprint. Another 115 stores are slated to be remodeled in the second half of 2019.

Online sales grew 14.4% and the company expects to surpass 20% growth in online sales in 2019.

“We are pleased with our overall online sales growth, be it that online sales at Stop & Shop was also impacted by the strike,” Muller said, during the call. A total of 124 Click and Collect locations were added during the quarter, most of them at Food Lion and Giant/Martin’s.

To date, the company has 483 Click and Collect locations, and plans to add another 117 by the end of the year. Muller said the company hopes to see 30% growth in e-commerce in 2020.

Peapod, the well-established home delivery arm of Ahold Delhaize’s business, continues to comprise the bulk of its e-commerce, at about 80% of the business, but the company sees strong growth opportunity for Click and Collect.

“It now represents roughly 20% of our U.S. business but it’s the area which we’ll see the fastest grow for sure,” said CFO Jeff Carr, during the call. “We continue to focus on home delivery growth. But Click and Collect, as we launch the new improved Click and Collect centers with more service, we will see Click and Collect grow more quickly.”

Meal solutions to expand

Next month, Ahold Delhaize plans to open a new Fresh Kitchen facility in Rhode Island, designed to serve Hannaford and Stop & Shop.

“The facility will be used to develop distinctive new meal solutions and culinary innovations in our own brand fresh food offering,” Muller said. “This will help us shorten the supply chain and present our customers a differentiating range in the various fresh departments.”

Click here to read the full quarterly report.