6.0%
I
Net sales
Net sales increased 0.6 percent in 2006 (3.5 percent in
2005 when excluding the additional week in 2004) to
USD 16.4 billion. The increases were largely attributable
to the opening of new and replacement stores.
Excluding gasoline net sales, Stop Shop identical sales
decreased 2 percent in 2006 and 0.4 percent in 2005.
Giant-Landover does not currently sell gasoline.
Identical sales were negatively impacted in both 2006
and 2005 by pressure from new competitor store
openings, increased competitive promotional campaigns
and increased competition from alternative retail formats,
including traditional discount stores and wholesale club
outlets. To address this, the arena is implementing its
Value Improvement Program, which will improve its price
positioning and product and service offerings, as
discussed in "Strategy" in this Annual Report.
Net sales growth in 2006 and 2005 was impacted by net
sales made to BI-LO, Bruno's and Wilson Farms. In 2005,
net sales of USD 108 million were made to these entities,
which prior to their divestments in 2005, were eliminated
as intercompany sales. No sales were made to these
entities subsequent to 2005.
Operating income
In 2006, operating income decreased USD 15 million to
USD 839 million. Operating income was lower primarily
due to increased competitor activity and price investments
related to the roll-out of the Value Improvement Program.
In 2005, operating income increased USD 26 million
to USD 854 million due to restructuring charges of
USD 54 million incurred in 2004 related to the
restructuring of the Giant-Landover supply chain and
the closing of four Super-G stores and a USD 38 million
decrease in impairment losses incurred in 2005 compared
to 2004. Lower margins due to competitive pressures and
increased promotional activity was a partial offset.
Giant-Carlisle/Tops Arena
The following table sets forth net sales information and
operating income for the Giant-Carlisle/Tops Arena in 2006,
2005 and 2004:
In millions, except percentages
2006
(52 weeks)
2005
(52 weeks)
2004
(53 weeks)
Net sales in EUR
4,778
4,989
5,209
Net sales in USD
5,999
6,201
6,480
Change in identical sales:
Giant-Carlisle
3.9%
3.6%
Tops
(5.5%)
(4.7%)
Change in comparable sales:
Giant-Carlisle
5.1%
Tops
(4.8%)
(3.9%)
Operating income in EUR
51
72
114
Operating income in USD
62
90
141
Operating income as
a percentage of net sales 1.0% 1.5% 2.2%
Net Sales
Net sales decreased 3.3 percent in 2006 (2.4 percent
in 2005 when excluding the additional week in 2004)
to USD 6.0 billion. The decreases were largely attributable
to the divestments of Wilson Farms and SugarCreek
convenience stores in the second quarter of 2005
and the divestment or closure of Tops stores in the
Adirondacks and Northeast Ohio areas in 2005 and 2006.
Excluding these divestments, net sales increased 4.3
percent in 2006. The increase in net sales was due in part
to the acquisition of 14 Clemens Markets stores in the
fourth quarter of 2006.
Excluding gasoline net sales, Giant-Carlisle identical sales
increased 2.1 percent in 2006 and 2.6 percent in 2005,
while at Tops they decreased 6.6 percent in 2006 and
6.2 percent in 2005.
The decline in identical sales at Tops was primarily caused
by a weak economic environment and strong competition
in the Northeast Ohio region. By year-end 2006, all of the
Company's stores in this market have been divested
or closed.
Operating income
In 2006, operating income decreased USD 28 million
to USD 62 million. The decrease in operating income
was attributable primarily to costs of USD 118 million
related to the exit of Tops from the Northeast Ohio market.
The decrease was partly offset by the impact of
divestitures of lower-margin Tops operations over the
past two years.
The arena's operating income decreased in 2005
compared to 2004, primarily as a result of higher
impairment of assets at Tops, especially in the Northeast
Ohio region. This decrease was partly offset by improved
net sales at Giant-Carlisle.
Albert Heijn Arena
The following table sets forth net sales information and
operating income for the Albert Heijn Arena in 2006, 2005
and 2004:
2006
2005
2004
In millions, except percentages
(52 weeks)
(52 weeks)
(53 weeks)
Net sales in EUR
7,136
6,585
6,418
Albert Heijn change in identical sales
6.7%
4.2%
Operating income in EUR
411
288
317
Operating income as
a percentage of net sales
5.8%
4.4%
4.9%
Ahold Annual Report 2006 47
