Ahold Delhaize trims profit target amid US margin weakness
By Federica Mileo and Diana Mandia
(Reuters) — Supermarket group Ahold Delhaize on Wednesday trimmed 2023 earnings guidance and flagged margin weakness in the United States, its main market, sending its shares falling nearly 6%.
Retailers, whose profits have been boosted over the past two years by rising prices, are seeing their margins squeezed as food price inflation falls and consumers curb their spending.
The group, which operates the Stop & Shop, Giant, Food Lion and Hannaford chains in the U.S. and the Albert Heijn and Delhaize chains in the Netherlands and Belgium, now sees 2023 underlying earnings per share slightly below last year's level, It had previously forecast annual profit in line with 2022.
Margins in the U.S. grew less than expected in the third quarter, Ahold said in a statement, but added it expected this pressure to be transitory and pass in a couple of quarters.
«The reduction in emergency federal Supplemental Nutrition Assistance Program (SNAP) benefits, higher interest rates and the resumption of student loan repayments in October continue to weigh on customer sentiment,» CEO Frans Muller said about the U.S. market.
Stubbornly high inflation, interest rates and changes in U.S. government support were creating further anxiety for many customers, he added.
Ahold's underlying operating margin in the U.S. was 4.2% in the third quarter, below consensus expectations of 4.4%, according to KBC analyst Michiel Declercq.
«Margins in the US were softer than expected, despite the fact that most of the headwinds were already well flagged during the pre-earnings call,» Declercq said in a note to investors.
Ahold raised its 2023 cash flow target for the second time this year, citing significant improvements in
Read more on investing.com
