Ahold to roll out new-look bakery departments across US business by year-end

By Vince Bamford contact

- Last updated on GMT

Two hundred stores now have the new-look bakeries. Photo: Ahold Analyst Presentation
Two hundred stores now have the new-look bakeries. Photo: Ahold Analyst Presentation

Related tags: Constant exchange rates, Business, Czech republic, Ahold

Retail giant Ahold aims to have completed the roll out of new-look bakery departments across its entire US estate by the end of the year.

Announcing its full-year results for 2015, the business said revamped bakery and fresh produce departments were bringing an increase in sales of between 3% and 5%.

Ahold introduced the new-look bakeries – designed to be easier to shop - as a pilot scheme last year and had since rolled them out to more than 200 stores. It plans to have the roll-out completed across the US estate by the end of Q4 2016.

When you look at the new produce departments and also the bakery you clearly see a 3% to 5% increase in sales, which is what we would have estimated for​,” Ahold CEO Dick Boer told analysts. “Stores I have visited, even pilot stores, are still growing sales – so they are in really good shape​.”

Improve quality and range

The ambition we have to improve our quality and ranges is really starting to bear fruit​,” he added.

The bakery and fresh produce initiatives were funded by Ahold’s Simplicity savings and efficiency program, which the company said had allowed it to make “significant investments in our businesses and for our customers​”.

Ahold said its market share had improved year-on-year in dollars and volume. The business has also extended its own-label range, with 1,200 products developed and launched during the year.

Natural and organic

Ahold said sales from its natural and organic Nature’s Promise range, which was extended in Q4 to 800 lines, saw double-digit sales increase.

We are seeing strong growth in the natural and organic categories​,” added Boer.

Full-year net sales from the Ahold USA division – separate from the retailer’s operations in The Netherlands and Czech Republic – rose 1.4% at constant exchange rates to €23.7bn ($26bn).

Natures promise

Fourth-quarter Ahold USA sales rose 10.7% at constant exchange rates to just over €6bn ($6.6bn), and benefited from the opening of 25 former A&P stores acquired by Ahold, mainly in the New York Metro area.

In The Netherlands, full-year net sales rose 8.6% to €12.7bn ($13.9bn), and were up 15.3% at constant exchange rates in the Czech Republic to €1.8bn ($2bn).

Overall business results

Across the business, sales rose 4.3% at constant exchange rates to €38.2bn ($42bn), with underlying income up 3.6% to €1.5bn ($1.6bn). Operating margin dropped from 3.9% to 3.8%, which Ahold said was mainly due to investment in its online business.

With a sharp focus on supporting our great local brands and investing to serve the rapidly changing interests and needs of our customers, we have made very good progress and achieved strong operating and financial results for the fourth quarter and the year​,” said Boer.

We challenged ourselves to innovate faster, to bring our customers fresher products in new and different ways, and to deliver greater value. We are pleased with the response from our customers​.”

Delhaize merger

Looking ahead, Ahold said its proposed merger with Delhaize was on track to close in mid-2016.

The retailer added it would continue to fund ongoing investments in its customer proposition through the Simplicity program, which is expected to deliver savings of €350m ($385m) in 2016.

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