Given its earlier fiscal reporting period, Ahold Delhaize (parent company of Food Lion, Hannaford, Stop & Shop and others) allows for an early glimpse of the grocer results we will see in the coming weeks. We’d expect direct competitors to have a stronger result when they report January-ending quarterly results given that the month picked up given the weather (grocery retail was +2.3% in January versus +0.8% in December). Ahold Delhaize's U.S. comparable-store sales were down -1.0% during Q4 2023 versus +0.9% in Q3 2023, but management implied that consumer trends have been stable. Ahold Delhaize CEO Frans Muller noted, “The good news is that we see in a couple of brands in the U.S. volume growth coming back [Placer.ai shows these to be Hannaford and Food Lion]...and we see more support from our CPG partners to build volume growth, which is of course very important for all of us.”
Importantly, Ahold Delhaize pace of reinvestment in Food Lion will remain undiminished; 15% of the fleet will be remodeled again in 2024, and the banner continues to expand its digital/delivery capabilities. On expansion, Muller noted, “We have a strong financial base and strong balance sheet, and we would like to grow more into the U.S. In-market growth of course is the most profitable and the most intuitive. Where we can build more stores or where we have bolt-on opportunities, we'll look into this. We have a very good team there who knows exactly the opportunities...We also will grow our store footprint of Food Lion more organically so building new stores ourselves and there's a good opportunity there. I think the market is not easy as we know and that is also an opportunity for more consolidation and we would like to be an active part of that.”
Muller also commented on the high rate of market share loss by Stop & Shop, which contributed 30% of Ahold Delhaize’s U.S. visits in 2023 based on our visitation data. Placer.ai shows high-single-digit declines in visits over the past several months (below).
Stop & Shop’s retail strategy is “focused on delivering a wide assortment of fresh, healthy options at a great value through strong weekly sales and everyday low prices.” Given the higher basket size and mix that must come from this more affluent customer mix (below), the magnitude of the decline must be meaningful to the business’ financials. Trying to read between the comments during the company's most recent earnings call, it seems like in-stocks, merchandising, merchandise quality/freshness (i.e. supply chain), price levels, and store standards are all areas for improvement. Muller promised a full answer to Stop & Shop and the other banners in May when they will hold an investor day.
