Central Europe Arena results
Net sales
The following table sets forth net sales, store counts and
sales area information for the Central Europe Arena in 2005
and 2004:
1 Consolidated net sales for the Central Europe Arena are presented In EUR, but
occur in the local currency of each of the countries where the stores are located.
2 Comparable sales are the same as identical sales.
3 At year-end.
4 The sales area in thousands of square feet in 2005 and 2004 was 7,371 and
7,388, respectively.
The increase in net sales in 2005 compared to 2004 was
primarily attributable to favorable changes in currency
exchange rates, the acquisition of 58 Julius Meinl stores
during the second half of 2005 and the opening of 26
new stores. Net sales, excluding currency impact,
decreased by 3.4%.
Net sales in 2005 were negatively impacted by the
divestment of 13 Polish hypermarkets in the first quarter
of 2005, the closing of seven unprofitable small stores
and lower identical sales. Net sales, excluding currency
impact and the divested Polish hypermarkets, increased
by 4.9%. Excluding the impact of currency exchange
rates, the divested Polish hypermarkets and the acquired
Julius Meinl stores net sales in 2005 increased by 3.6%.
The decrease in identical sales in 2005 was primarily
caused by lower net sales per transaction as a result of
fierce price competition and a strong customer focus on
discounted articles, as well as by fewer transactions.
Market share in the Czech Republic increased as a result
of the acquired Julius Meinl stores and the opening of
new stores, despite the negative publicity concerning the
quality of certain perishable products. Market share in
Slovakia increased slightly and the market share in Poland
decreased primarily due to the divestment of the Polish
hypermarkets in the first quarter of 2005.
Operating loss
The following table sets forth information relating to operating
loss for the Central Europe Arena in 2005 and 2004:
2005
2004
In millions, except
percentages
(12 1
months) 1
Change
(12
months)
Net sales in EUR 1
1,761
4.6
1,683
Operating loss in EUR
(44)
(18.5)
(54)
Operating loss as a
percentage of net sales
(2.5%)
(3.2%)
Change in gross profit
margin
1.0
Change in operating
expenses as a percentage
of net sales
(0.3)
1 Consolidated net sales for the Central Europe Arena are presented in EUR, but
occur in the local currency of each of the countries where the stores are located.
The arena's operating loss decreased in 2005 compared
to 2004, primarily as a result of a gain of EUR 19 million
on sales of real estate in 2005, compared to a gain of
EUR 9 million in 2004, and a EUR 12 million write-off
of receivables and inventories in 2005. In addition,
operating loss decreased in 2005 as a result of
impairment losses on property, plant and equipment and
other intangible assets of EUR 5 million in 2005
compared to EUR 30 million in 2004. In 2004, operating
expenses were positively affected by EUR 10 million
related to the release of a provision for costs in connection
with the termination of a shopping center lease
agreement.
Excluding gains on sale of real estate and impairment
losses, the arena's operating loss decreased by EUR 25
million primarily due to higher operating expenses which
were partially offset by a higher gross profit.
Despite the intensive price competition, gross profit
increased primarily due to higher net sales, a higher gross
profit margin as a result of more centralized sourcing,
and the divestment of the Polish hypermarkets.
Operating expenses, excluding gains on sales of real
estate and impairment losses, as a percentage of net
sales, increased in 2005 primarily as a result of lower
cost leverage due to declining identical sales, project
costs related to the start-up of a new centralized
accounting center, investments in the quality of the
backoffice operations to prepare for future growth.
2005
2004
In millions, except
percentages, store count
(12
Change
(12
and sales area
months)
months)
Net sales in EUR 1
1,761
4.6
1,683
Change in identical sales 2
(4.9)
Company-operated stores 3
499
442
Franchise stores 3
3
-
New stores
80
25
Remodeled stores
36
37
Closed stores
20
10
Sales area in thousands
of square meters 3, 4
685
686
Net sales as a percentage
of consolidated net sales 4.0% 3.8%
AHOLD ANNUAL REPORT 2005 71
