European supermarket retailer Ahold Delhaize reported first-quarter core profit above market expectations on Wednesday.
The group, which operates supermarket chains including Stop & Shop, Giant, Food Lion and Hannaford in the United States, alongside Albert Heijn and Delhaize in the Netherlands and Belgium, said underlying operating income increased 0.7% to 896 million euros during the quarter.
The reported figure exceeded the 858 million euros expected on average by analysts polled by the company.
At constant currency exchange rates, underlying operating income rose 8.1% from the previous year, the company said.
Currency pressures weigh on reported sales
Like several other European companies with significant US exposure, Ahold Delhaize faced pressure from foreign exchange movements during the quarter, as the weaker US dollar reduced the value of earnings when converted into euros.
First-quarter net sales totalled 22.3 billion euros, rising 2% at constant exchange rates but declining 4.3% on a reported basis due to the stronger euro.
The company said the currency impact particularly affected its US-heavy operations.
Ahold Delhaize stated, “Through our family of great local brands, we understand what matters most to customers. Customer value remains at the heart of everything we do.”
The company added that balanced investments across customer value propositions, portfolio strengthening and footprint expansion helped build resilience amid changing retail market conditions.
US and European comparable sales rise
Comparable sales excluding gasoline increased 1.5% in the US during the quarter.
The company said sales benefited by 0.4 percentage points from weather conditions and calendar shifts.
However, performance was negatively affected by 1.9 percentage points due to pharmacy pricing impacts linked to the Inflation Reduction Act, deflation in egg prices and lower Supplemental Nutrition Assistance Program benefits following programme changes.
In Europe, comparable sales excluding gasoline rose 2.6%.
Ahold Delhaize said the cessation of tobacco sales in Belgium and calendar-related shifts created a net negative impact of 0.1 percentage points.
Online sales and margins improve
The retailer also reported continued momentum in its online business.
Ahold Delhaize said online sales increased 8.3% at constant exchange rates and 2.9% at actual exchange rates during the quarter.
Growth was primarily driven by strong US performance, where online sales rose 14.3% at constant exchange rates.
The company highlighted customer demand for convenience, assortment and personalised shopping experiences across its omnichannel platforms, including the introduction of new AI-enabled services.
“Our brands’ customers appreciate the convenience, assortments and personalization offered by our omnichannel shopping experiences, including the addition of new AI-enabled services,” the company said.
Underlying operating margin for the quarter stood at 4.0%, representing an increase of 0.2 percentage points at constant exchange rates.
The company said strong US performance and improved insurance results offset the impact of government pricing intervention measures in Serbia’s grocery industry.
Diluted underlying earnings per share rose 8.9% year-on-year at constant exchange rates to 0.62 euros.
IFRS operating income totalled 895 million euros, while IFRS diluted earnings per share also came in at 0.62 euros.
Company maintains full-year outlook
Free cash flow for the quarter was negative 330 million euros, driven by working capital movements related to calendar and seasonal timing differences between quarters and compared with the previous year.
Despite ongoing currency-related pressures, Ahold Delhaize reiterated its full-year 2026 outlook for its 53-week financial year.
The company maintained expectations for an underlying operating margin of around 4%, mid- to high-single-digit growth in diluted underlying EPS at constant exchange rates.
The free cash flow of at least 2.3 billion euros and gross cash capital expenditure of around 2.7 billion euros.
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