Giant Food Posts 4 Percent Sales Boost During Second Quarter
|
TOOLBOX
   Resize
COMMENT
 Discussion Policy
 CLOSE
Comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions. You are fully responsible for the content that you post.
Who's Blogging  |
Tuesday, July 28, 2009; 6:54 PM
A key measure of sales at Giant Food jumped nearly 4 percent during the second quarter compared with the year-ago period, turning the once-beleaguered grocer into the best performer under parent company Royal Ahold.
Ahold, based in Amsterdam, reported Tuesday that sales at Giant Food stores open at least a year -- known as identical-store sales -- rose 3.7 percent, while identical-store sales at sister chain Stop & Shop grew 1.7 percent. Total sales at the two chains increased 2.8 percent, to $4.1 billion.
Ahold said second-quarter revenue for the entire company, which includes several European retailers, was $9.1 billion, up 11.5 percent from last year, though most of the gain came from fluctuations in currency rates. Giant Food and Stop & Shop account for about 47 percent of Ahold's revenue.
Giant's results mark its fourth consecutive quarter of identical-store sales growth and are evidence of a turnaround that has been several years in the making. The chain, based in Landover, is remodeling about 100 stores under a program called Project Refresh, the largest capital investment in Giant since Ahold bought it more than a decade ago. Ahold has also lowered prices and worked to improve the quality of produce and prepared foods.
J.P. Morgan Chase analyst Jaime Vazquez said Giant's performance was particularly strong considering the slowing rate of inflation in food prices, which the company estimated at an annual rate of 1 to 2 percent during the second quarter, compared with 4 percent in the first quarter.
"Ahold's self help in the U.S. is offsetting at least partly the general trend we are seeing where food inflation is coming down and identical sales growth and gross margins come under pressure," he wrote in a research note sent to clients Tuesday.
Rabobank analyst Patrick Roquas also said that Ahold's U.S. business had increased volume, another positive sign. But Ahold's overall performance fell short of analysts' expectations during the second quarter.
"In a changing environment, we continue to manage the balance of sales, market share and margin in each of our markets and remain well-positioned to meet our customers needs," the company said in a statement.
