Supermarket group Ahold Delhaize beat second-quarter core profit margin expectations on Wednesday.
Solid sales in the group’s US and European markets, as well as cost control, supported the increased margin.
The group, which operates the Stop & Shop, Giant and Food Lion in the US and the Albert Heijn and Delhaize chains in the Netherlands and Belgium, reported an underlying operating margin of 4.2% for April to June.
This topped the 3.9% expected by analysts polled by the company.
Sales rose 1.2% to €22.35 billion, also beating expectations of €22.14 billion.
Ahold Delhaize shares were up 4.4% in early trading.
‘Encouraging’
Chief executive of the group Frans Muller said, “We are starting to benefit from structural changes in our business related to the Belgium Future Plan and cost savings initiatives in Europe and the US that were initiated over the past 12 months.”
Muller added that the underlying operating margin positioned Ahold Delhaize well to continue growth investments.
He also described volume trends as “encouraging” in both regions.
The company pointed to increased promotional opportunities supported by vendors, as well as its broad assortment of private label products that appeal to cost-conscious customers.
In the US – which generates more than half of the company's revenue – major retailers including Target and Walmart have been pushing to keep prices on essentials low as many Americans shun high spending and turn to discount shopping in the face of sticky inflation.
As part of its restructuring efforts, the supermarket group announced in July the closure of 32 Stop & Shop stores in the US by the end of the year.
The Amsterdam-listed group said it estimated the net impact of such closures on sales would be €150-250 million in the third quarter.
The company reiterated its full-year guidance for an underlying operating margin of at least 4%.
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