* at constant exchange rates
CEO Dick Boer said: “In a challenging competitive environment, we remain focused on executing our Reshaping Retail strategy and continue to make investments in our customer and value offering, making our stores a better place to shop.
“In the United States, the roll-out of our program to improve our customer proposition is progressing well, bringing better quality, service and value to our customers. By the end of this quarter, the program was active in 320 stores and will be rolled out to more than half of our stores by the end of this year. The accelerated roll out of the program together with our decision to absorb commodity price increases resulted in an investment in margin that was partly offset by cost savings from our Simplicity program.
"In Europe, as part of our Simplicity program, we implemented a reorganization of our head office support roles to improve efficiency. In addition, we streamlined Albert Heijn's commercial organization to enable a greater focus on improving quality and value for our customers and successfully introduced new products, especially in fresh.
"We expect that ongoing investments in our customer proposition and further development of our product range across multiple categories will result in improving sales trends."
This interim report includes forward-looking statements, which do not refer to historical facts but refer to expectations based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those included in such statements. These forward-looking statements include, but are not limited to statements as to the progress of Ahold’s Reshaping Retail strategy, customer proposition program, Simplicity program, share buyback program, Ahold’s response to commodity price increases, Ahold’s investments in customer proposition and value offering, the reorganization of Ahold's head office in the Netherlands and the streamlining of Albert Heijn's commercial organization, Ahold's growth strategies, sales performances, margins, Ahold’s enterprise risk management program, the conversion of franchise stores to the Albert Heijn banner and the court approval, size, funding and timing of the Waterbury settlement. These forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by the forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond Ahold’s ability to control or estimate precisely, such as the effect of general economic or political conditions, fluctuations in exchange rates or interest rates, increases or changes in competition, Ahold’s ability to implement and successfully complete its plans and strategies, the benefits from and resources generated by Ahold’s plans and strategies being less than or different from those anticipated, changes in Ahold’s liquidity needs, the actions of competitors and third parties and other factors discussed in Ahold’s public filings and other disclosures. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this interim report. Ahold does not assume any obligation to update any public information or forward-looking statements in this interim report to reflect subsequent events or circumstances, except as may be required by applicable laws. Outside the Netherlands, Koninklijke Ahold N.V., being its registered name, presents itself under the name of “Royal Ahold” or simply “Ahold.”
Financial Summary Second Quarter 2014
Frans Muller, President and Chief Executive Officer of Delhaize Group, commented: “Our operating performance in the second quarter was in line with our expectations. In the U.S., comparable store sales growth remained strong, driven by momentum at Food Lion and Hannaford. Our U.S. underlying operating profit began to stabilize as we started to cycle last year’s price investments.”
“In Belgium, our performance was impacted by weak sales and market share loss. In June, we announced our intention to implement a comprehensive Transformation Plan. Through significant organizational changes and accelerating the implementation of our commercial strategy, we aim to remain a differentiated and leading food retailer in Belgium with high quality, well-priced products and strong customer service.”
“In Southeastern Europe, we gained further market share in Greece, Romania and Serbia. In Serbia, our results continued to be impacted by macro-economic instability, negative GDP growth and retail deflation. While we are developing a new commercial strategy to strengthen our performance, the current economic outlook is not expected to improve in the near term. This has caused us to book a further impairment.”
“For the second half of the year, we are on schedule with our “Easy, Fresh & Affordable” initiative at Food Lion while we also have the firm intention to negotiate the implementation of our announced Transformation Plan at Delhaize Belgium. For the full year, we expect to generate a healthy level of free cash flow.”