00 Ahold ANNUAL REPORT 2002 51
BOARD GOVERNANCE HIGHLIGHTS OPERATING REVIEW FINANCIAL INVESTOR REL AT IONS
- Fiscal 2002
Net sales at Stop Shop increased by EUR 234 miiiion, or 2.4%, to EUR 10.0 billion in fiscal 2002 compared to fiscal
2001. Excluding the impact of currency exchange rates, net sales would have increased by EUR 735 million, or 7.9%, in
fiscal 2002 compared to net sales in fiscal 2001. Net sales increased and market share grew despite weakened economic
conditions and a highly competitive retail environment. Net sales were positively affected by the opening of 22 new and
replacement stores during fiscal 2002. Additionally, net sales benefited from the full-year consolidation of 36 Grand Union
stores, which we acquired in March 2001.
Operating income at Stop Shop increased by EUR 134 million, or 21.4%, to EUR 760 million in fiscal 2002 compared
to fiscal 2001. As a percentage of net sales, operating income was 7.6% in fiscal 2002 compared to 6.4% in fiscal
2001. The increase in operating income was due in part to increased net sales providing improved leverage of economies
of scale limiting the increase in operating expenses, along with an improvement in gross profit, as a percentage of net
sales. In addition, operating expenses, as a percentage of net sales, decreased due to efficiencies achieved from the
integration of the Edwards stores transferred from Giant-Carlisle and consolidated into Stop Shop as of fiscal 2001 and
the integration of Grand Union stores, which we acquired in March 2001. Previously, the Edwards division operated as
part of Giant-Carlisle but was strategically realigned to operate under the management of Stop Shop. Excluding the
impact of currency exchange rates, operating income would have increased by EUR 166 million, or 28.0%, in fiscal 2002
compared to fiscal 2001.
- Fiscal 2001
Net sales at Stop Shop increased by EUR 2.9 billion, or 42.5%, to EUR 9.8 billion in fiscal 2001 compared to fiscal
2000. Excluding the impact of currency exchange rates, net sales would have increased by EUR 2.7 billion, or 38.6%,
in fiscal 2002 compared to net sales in fiscal 2001. The increase in net sales was mainly due to the consolidation of
the Edwards division within Stop Shop's results beginning in January 2001. Additionally, the opening of 19 new and
replacement stores, along with the acquisition of 36 Grand Union stores, which were acquired in March 2001, positively
affected net sales. Excluding the consolidation and acquisitions noted above, net sales from identical stores remained
strong in fiscal 2001.
Operating income at Stop Shop increased by EUR 73 million, or 13.2%, to EUR 626 million in fiscal 2001 compared
to fiscal 2000. As a percentage of net sales, operating income decreased from 8.0% in fiscal 2000 to 6.4% in fiscal
2001. The decrease in operating income, as a percentage of net sales, was due to the consolidation of the Edwards
division into the results of Stop Shop, as noted above, and a one-time expense related to the conversion of the former
Grand Union stores. Additionally, we incurred EUR 29 million in costs in fiscal 2001 arising from the liquidation of
Bradlee's, a discount store chain formerly owned by Stop Shop. Currency exchange rates did not have a significant effect
on operating income in fiscal 2001 compared to fiscal 2000.
Retail trade: Giant-Landover
We acquired Giant-Landover, based in Landover, Maryland, in October 1998. The company was established as Giant Food,
Inc., in 1936. As of the end of fiscal 2002, Giant-Landover operated 189 retail stores selling food, pharmacy, health and
beauty care items and general merchandise in Maryland, Virginia, Delaware, New Jersey and the District of Columbia. Four
of the 189 stores are primarily drug stores that have a limited selection of food items. In New Jersey and Delaware, Giant-
Landover trades under the name "Super G" to distinguish itself from Ahold sister company Giant-Carlisle. In addition,
Giant-Landover and Peapod have teamed up to provide an internet-based home shopping and grocery delivery service
under the brand name "Peapod by Giant."
- Fiscal 2002
Giant-Landover net sales decreased by EUR 106 million, or 1.9%, to EUR 5.6 billion in fiscal 2002 compared to fiscal
2001. Excluding the impact of currency exchange rates, net sales would have increased by EUR 185 million, or 3.4%, in
fiscal 2002 compared to net sales in fiscal 2001. As discussed above, net sales were negatively affected by the weakened
economy in the United States, along with increased competition within the Giant-Landover trading area, particularly from
the new store growth of traditional supermarket competitors. Net sales were positively affected by the opening of eight new
and replacement stores during fiscal 2002.
Operating income at Giant-Landover increased by EUR 25 million, or 6.4%, to EUR 407 million, in fiscal 2002 compared
to fiscal 2001. As a percentage of net sales, operating income was 7.2% in fiscal 2002 compared to 6.7% in fiscal 2001.
Operating income increased in fiscal 2002, in spite of a decrease in net sales, mainly as a result of a slight improvement
in gross profit margin due to Giant-Landover selling a more profitable mix of products and benefiting from an increase in
vendor allowances for promotional activity, as well as a decrease in operating expenses. The decrease in operating
