Retail

Ahold Says Stop & Shop Easter Strike Will Hurt 2019 Margins

By Dayeeta Das
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Dutch supermarket group Ahold warned on Tuesday that a strike in its Stop & Shop chain in the United States would hurt its underlying 2019 profit margin, as it missed out on around $200 million (€177.7 million) on Easter week sales.

Ahold said the 11-day strike, which ended on Monday, would lead to a one-time reduction in underlying operating profit of around $100 million (€88.9 million) due to lost sales and spoiled inventory.

One-Time Effect

"This is purely a one-time effect", chief financial officer Jeff Carr told reporters.

"There is nothing other structural that is affecting our guidance."

Ahold Delhaize said it now expects the underlying operating margin for the group this year to be slightly lower than the 4.1% realised in 2018.

"Additionally, the percentage growth of underlying earnings per share in 2019 is revised from high single digits to low single digits," the company said.

The Impact

CEO Frans Muller said the effects on sales and the supply of supermarkets in the week before Easter had been disproportionately higher than they would have been in a regular week.

"We were surprised by this unfortunate event", Muller said, adding that overall the company had a good relationship with workers' unions, including in the US.

The Strike

The strike involved 30,000 workers in Connecticut, Massachusetts and Rhode Island.

Ahold said all would receive better pay, and those eligible would receive continued health insurance and pension benefits.

The deal would have no impact on Ahold's goal of reducing its overall costs by €540 million ($608 million) in 2019, Muller said.

Ahold kept its full-year free cash flow estimates unchanged at €1.8 billion, due to expected growth at its other chains in the United States and Europe.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

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