00 Ahold ANNUAL REPORT 2002 53
BOARD GOVERNANCE HIGHLIGHTS OPERATING REVIEW FINANCIAL INVESTOR REL AT IONS
Peapod is an on-line grocer based in Chicago, Illinois, where it was established in 1989. Peapod has operations in Chicago
and on the east coast of the United States. Additionally, Peapod and two of our other operating companies, Stop Shop
and Giant-Landover, have teamed up to provide an internet-based home shopping and grocery delivery service in southern
Connecticut; Boston and Cape Cod, Massachusetts; and Providence, Rhode Island (under the brand name "Peapod by
Stop Shop"); and Washington, D.C. and Baltimore, Maryland, (under the brand name "Peapod by Giant").
The following table sets out the net sales for our segment that covers other retail trade operations in the United States for
fiscal 2002, fiscal 2001 and fiscal 2000:
Fiscal 2002 Fiscal 2001 Fiscal 2000
EUR Change EUR Change EUR
(in EUR millions, except percentages) (restated) (restated)
Giant-Carlisle
2,940
6.4
2,762
(29.0)
3,888
BI-LO
3,833
(50)
4,036
8.5
3,720
Bruno's
1,974
1,558.8
119
Tops
3,309
(1.8)
3,369
11 2
3,029
Peapod
123
12.8
109
1180
50
Total Other United States
12,179
17.2
10,395
(2.7)
10,687
- Fiscal 2002
Net sales in our segment for other retail trade operations in the United States increased by EUR 1.8 billion, or 17.2%,
to EUR 12.2 billion in fiscal 2002 compared to fiscal 2001. Excluding the impact of currency exchange rates, net sales
would have increased EUR 2.3 billion, or 23.4%, in fiscal 2002 compared to net sales in fiscal 2001. Net sales growth
was largely due to the full-year consolidation of Bruno's beginning in December 2001, as well as strong net sales
performance from Giant-Carlisle, which is largely attributable to the full-year consolidation of five Laneco stores that we
acquired in fiscal 2001, along with the opening of nine new and replacement stores. At Tops, net sales declined slightly in
fiscal 2002 compared to fiscal 2001. We responded at Tops to the weakened economy with increased promotional activity
in order to maintain our position in the markets we serve. At Tops, net sales were also affected by the full-year consolidation
of 20 Grand Union stores, which we acquired in March 2001 and the opening of 11 new and replacement stores.
Currency exchange rates negatively affected our net sales in fiscal 2002 compared to fiscal 2001. Excluding the impact of
currency exchange rates, net sales at Tops and Giant-Carlisle would have increased by EUR 425 million, or 7.3%, in fiscal
2002 compared to net sales in fiscal 2001. In the southeastern United States, BI-LO's net sales decreased by 5.3% in
fiscal 2002 compared to fiscal 2001. Excluding the impact of currency exchange rates, BI-LO's net sales would have
remained stable in fiscal 2002 compared to fiscal 2001. In fiscal 2002, BI-LO, along with Bruno's, experienced a
particularly difficult trading environment due to high unemployment within its trading areas, along with an influx of new
and expanded competition, including large discount supercenters. Net sales results at BI-LO in fiscal 2002 reflected the
opening of 17 new and replacement stores, the closing of 22 unprofitable stores and the full-year impact of six Harris
Teeter stores, which were acquired in fiscal 2001. Bruno's opened five new and replacement stores in fiscal 2002.
Operating income in our segment for other retail trade operations in the United States decreased by EUR 193 million,
or 45.0%, to EUR 236 million in fiscal 2002 compared to fiscal 2001. As a percentage of net sales, operating income
decreased from 4.1% in fiscal 2001 to 1.9% in fiscal 2002. Operating income was negatively affected by a slight
decrease in gross profit margins, as well as an increase in operating expenses. Gross profit margins were lower as we
invested more in customer promotions due to the weakened economy and increased competitive pressures, particularly in
the southeastern region of the United States and in the markets served by Tops. The increase in operating expenses in
fiscal 2002 was mainly caused by a goodwill impairment charge related to Bruno's supermarkets in the amount of
EUR 128 million. Additionally, operating expenses increased due to integration costs relating to the merger of
administrative functions at Tops and Giant-Carlisle in fiscal 2002 and the integration of Bruno's operations, which we
acquired in December 2001. Currency exchange rates did not have a significant effect on operating income in fiscal 2002
compared to fiscal 2001.
- Fiscal 2001
Net sales in our segment for other retail trade operations in the United States decreased by EUR 292 million, or 2.7%, to
EUR 10.4 billion in fiscal 2001 compared to fiscal 2000, primarily as a result of the transfer of the Edwards division from
Giant-Carlisle to Stop Shop at the end of fiscal 2000, as discussed above. This was partially offset by the consolidation
of 20 former Grand Union stores, which were acquired in March 2001 and integrated into our Tops division, as well as
overall solid sales growth at identical and new stores. Additionally, all companies in this segment reported strong net sales
