By Ylan Q. Mui
Washington Post Staff Writer
Friday, August 29, 2008

Sales at Giant Food stores dropped 1.7 percent during the second quarter, while parent company Royal Ahold's efforts to lower prices across its banners cut into profits.

Giant's decline covered stores open at least a year and excluded gasoline sales. Ahold, based in the Netherlands, has been trying to reposition Giant through store renovations, price cuts and a new logo, which was unveiled last week. However, those initiatives have yet to translate into improved sales.

"We're confident that we're taking the right steps in terms of the price repositioning, in terms of the rebranding," Ahold chief executive John Rishton said in a phone interview yesterday.

Rishton acknowledged that many of Giant's stores are "embarrassingly old stock" and that the company has underinvested in the chain. But he said that sales have been going well at several recently renovated stores, declining to give specific figures. Rishton said the company is also working on plans to boost pharmacy sales, which have suffered from increased competition such as Wal-Mart's $4 generics.

At Giant's sister chain, Stop & Shop, sales at stores open at least a year were up 1 percent excluding gas sales during the second quarter, compared with the same period last year. Total sales for both chains were up 1.7 percent.

Companywide, Ahold sales were $8.6 billion during the second quarter, up 0.8 percent from last year. Earnings were $497 million, down 85 percent from last year, which included proceeds from the sale of distributor U.S. Foodservice and the company's operations in Poland.