While Ahold said it continues to expect to complete its merger with Delhaize by mid-2016, it is still in discussions with the FTC and is not sure how many stores it may have to divest, Dick Boer, Ahold chairman, president and CEO, told investors Wednesday.
Asked whether the company expects to dispose of 83 stores, Boer said, “It’s still unclear which stores really need to be disposed of, [though] the number of stores impacted by the merger is rather limited.”
He said Ahold is “now in close contact with several buyers for the identified stores, and we still feel confident we will be able to complete the transaction in mid-2016.”
The Ahold-Delhaize merger, announced last July, has received approval from Belgian officials, and as talks with the FTC proceed, "all key integration work streams are well on track, working on strategy, organization and synergy capture, ready for Day One," Boer pointed out.
“We also recently held our first joint meeting of a wide group of Ahold and Delhaize leaders, which only reaffirmed how much we have in common and the exciting opportunities we see ahead of us. We feel there is good momentum to combine the two strong retailers and build on great local brands.”
Commenting on the 3% sales gain in the U.S. during the first quarter — which the company attributed primarily to the addition of 25 former A&P stores it acquired in the New York metropolitan area late in the fourth quarter — Jeff Carr, EVP and CFO, said sales in Ahold’s other three divisions were “relatively flat, which is not positive but it’s also not negative.”
With U.S. comparable store sales up 1%, Carr said, “We’re satisfied with where we’re at, but we’d like to see the identicals growing faster.”
To boost sales, the executives said Ahold USA is investing in quality and price in its produce, bakery and dairy departments and in a new round of price reductions initiated late in the fourth quarter.
Ahold began lowering prices at the end of 2014, Boer noted — funded from a series of ongoing initiatives aimed at reducing costs that the company can invest back into price as part of the chain’s Simplicity program — “and we [believe] that will eventually feed through into better price perception. And we continue to close gaps and improve our price position as part of a rolling program funded by continuously looking into ways to improve the efficiency of our operation.”
Asked if Ahold might potentially invest more in price than the savings from the Simplicity program, Carr said, “We would always look to be competitive, and if there was a requirement to invest more, then obviously we’d look at that. But we’re comfortable with the opportunities [we have] now that we can be really competitive in all of our markets.
“So we’ll continue to invest in price as we need to in all our markets. But today we feel our Simplicity program is providing sufficient funding to maintain margin and drive identical volume growth, which is our key focus.”