2 www.ahold.com/reports2008
Group performance
Net sales
Operating income
Net sales
Operating and financial review
Net sales in 2008 were EUR 25.7 billion, up 3.3 percent compared to 2007. At
constant exchange rates, net sales increased by 6.9 percent. Net sales growth was
positively impacted by identical sales growth, store expansions, remodeling of
stores and the conversion of 54 former Schuitema stores into the Albert Heijn
format in the second half of 2008. You can read more about the net sales of our
operating companies in Performance by segment.
Our net sales consist of consumer sales and sales to franchise stores. Franchise
stores typically operate under the same format as Ahold-operated stores, and are
not distinguishable from them. Franchisees generally purchase merchandise from
Ahold, pay a franchise fee and receive support services, including management
training, field support and marketing and administrative assistance.
In 2008, operating income was EUR 1.2 billion, up EUR 130 million or
12.2 percent compared to 2007. Lower gross margins as a result of price
investments were more than offset by cost reductions, resulting in an underlying
retail operating income of EUR 1.3 billion, or 5.0 percent of net sales, in line
with our 2008 guidance of 4.8 percent to 5.3 percent. Underlying retail operating
income is total retail operating income adjusted for impairments gains and losses
on the sale of assets and restructuring and related charges. We believe this
measure provides better insight into the underlying performance of our retail
operations. You can read more about the results of our operating companies in
Performance by segment. Impairments, gains and losses on the sale of assets
and restructuring and related charges are listed below.
Core Corporate Center costs (as defined in Non-GAAP financial measures) were
EUR 86 million, down EUR 20 million compared to 2007 and exceeding our 2006
target to halve core costs by the end of 2008. The savings were achieved by staff
reductions and substantial cuts in discretionary spend. Total Corporate Center
costs were EUR 96 million, down 20 percent compared to 2007. In line with
our organizational structure, Ahold's general merchandising and global sourcing
activities are no longer coordinated centrally, but were incorporated in the two
continental platforms in 2007. The resulting reduction of Corporate Center costs
in 2008 was offset by increased costs related to our self-insurance activities in
the United States. In 2008, interest rates declined significantly, resulting in
higher discounted provisions to cover future insurance claims.
Impairment of assets
Ahold recorded the following impairments and reversals of impairments of assets in
2008 and 2007:
2008
2007
million
million
Stop Shop/Giant-Landover
(10)
(17)
Giant-Carlisle
-
(2)
Albert Heijn
(4)
(7)
Albert/Hypernova
1
(3)
Total Retail
(13)
(29)
Corporate Center
-
(5)
Total
(13)
(34)
AHOLD ANNUAL REPORT 2008 11
08
125,722 6.9%
07
24,893 6.6%
06
24,642 4.2%
05
23,767 2.3%
04
23,117 4.3%
*Net sales growth at constant exchange rates
2008 2007
I1
2008 2007
€m
€m
Stop Shop/
Giant-Landover
11,681
45.4
12,192
49.0
Giant-Carlisle
3,238
12.6
3,145
12.6
Albert Heijn
9,029
35.1
7,998
32.1
Albert/Hypernova
1,774
6.9
1,558
6.3
