net sales growth at Stop Shop, Albert Heijn and Giant-Landover. Additionally, net sales grew as a result of the opening
of new stores and as a result of inflation.
Gross profit
- Fiscal 2002
Our gross profit, which includes distribution costs, was EUR 13.5 billion, or 21.5%, as a percentage of net sales, in fiscal
2002 compared to EUR 12.0 billion, or 22.1%, as a percentage of net sales, in fiscal 2001. The decrease in our gross
profit margin in fiscal 2002 was primarily attributable to our growing food service business, which is a lower margin
business than our retail trade business. In addition, the gross profit margins of our retail trade operations in Latin America
and Asia Pacific were slightly lower in fiscal 2002 than in fiscal 2001 due to price competition.
- Fiscal 2001
Gross profit was EUR 12.0 billion, or 22.1%, as a percentage of net sales, in fiscal 2001 compared to EUR 9.6 billion, or
23.4%, as a percentage of net sales, in fiscal 2000. This decline in gross profit margin was due to the full-year consolidation
of USF and PYA/Monarch, both food service businesses. As noted above, the food service business typically generates
lower gross profit margins than the retail trade business and, as a result, the expansion of our food service business had a
negative effect on gross profit margins in fiscal 2001. The decline in gross profit margin was partially offset by increased
centralized buying of perishable products for our U.S. retail trade operations.
Operating expenses
The following table shows a breakdown of our operating expenses by category for fiscal 2002, fiscal 2001 and fiscal 2000:
Fiscal 2002 Fiscal 2001 Fiscal 2000
Euro of sales Euro of sales Euro of sales
(in EUR millions, except percentages) (restated) (restated)
Selling expenses
(9,073)
14.4
(8,080)
14 9
(6,534)
16 0
General and administrative expenses
(1,989)
3.2
(1,843)
3 4
(1,365)
3 4
Goodwill and intangible assets amortization
(433)
07
(256)
05
(50)
0 1
Impairment of goodwill and other intangible assets
(1,287)
2.1
(8)
Impairment of other long-lived assets
(137)
0.2
(10)
Gain on disposal of tangible fixed assets
69
(0.1)
122
(0 2)
30
(0 1)
Exceptional loss on related party default guarantee
(372)
0.6
Total operating expenses
(13,222)
21.1
(10,075)
18.6
(7,919)
19.4
- Fiscal 2002
Our operating expenses increased by EUR 3.1 billion, or 31.2%, in fiscal 2002 compared to fiscal 2001. As a percentage
of net sales, our operating expenses were 21.1% in fiscal 2002 compared to 18.6% in fiscal 2001. The increase in our
operating expenses was largely due to impairment charges in fiscal 2002 in the total amount of EUR 1.4 billion. As
discussed above, in fiscal 2002, as a result of the declining economic conditions in certain trading areas, we recorded
goodwill impairment charges of EUR 882 million relating to Ahold Supermercados in Spain, as well as goodwill
impairment charges of EUR 215 million related to our subsidiaries Disco and Santa Isabel, EUR 128 million related to
Bruno's and EUR 54 million related to Bomprego and G. Barbosa. Operating expenses were also negatively affected by
EUR 433 million of goodwill and other intangible asset amortization. Additionally, we incurred charges totaling EUR 137
million relating to impairment of other long-lived assets, primarily in the Czech Republic, Poland, Spain, Latin America,
Asia Pacific and the United States. Our operating expenses in fiscal 2002 also were negatively affected by the loss
recorded relating to the default by VRH on bank debt that we had guaranteed. As a result, we had to acquire substantially
all of VRH's DAIH shares for a total amount of USD 448 million, which exceeded the fair value of the shares acquired,
resulting in an exceptional loss of EUR 372 million. For additional information on this transaction, please see Note 5 to
our financial statements. In addition to the impairment charges and the exceptional loss, our operating expenses in fiscal
2002 were negatively affected by the full-year consolidation of Alliant. Our selling expenses increased in fiscal 2002 to
EUR 9.1 billion from EUR 8.1 billion in fiscal 2001 as a result of acquisitions and the related increase in net sales and
inflation. Selling expenses, however, decreased as a percentage of net sales as a result of our continued expansion of our
food service business through the acquisition of Alliant, which business' selling expenses, as a percentage of net sales,
was lower than our retail trade business. Our general and administrative expenses increased in fiscal 2002 to EUR 2.0
billion from EUR 1.8 billion in fiscal 2001, as a result of acquisitions and increases in net sales and inflation. As a
percentage of net sales, our general and administrative expenses declined as a result of the growth of our food service
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