BsimEiHHta
Group financial review (continued)
Results from operations
Ahold USA
The Netherlands
Ahold at a glance I Business review I Governance I Financials I Investors
Ahold's 2014 and 2013 consolidated income statements are summarized as follows:
million
2014
of
net sales
2013
of
net sales
Net sales
32,774
100.0%
32,615
100.0%
Gross profit
8,686
26.5%
8,682
26.6%
Underlying operating expenses
(7,419)
(22.6)%
(7,303)
(22.4)%
Underlying operating income
1,267
3.9%
1,379
4.2%
Impairments
(31)
(83)
Gains on the sale of assets
20
28
Restructuring and related charges and
other items
(6)
(85)
Operating income
1,250
3.8%
1,239
3.8%
Net financial expense
(235)
(291)
Income taxes
(248)
(153)
Share in income of joint ventures
24
10
Income from continuing operations
791
2.4%
805
2.5%
Income (loss) from discontinued operations
(197)
1,732
Net income
594
1.8%
2,537
7.8%
Net sales, at $26.0 billion, decreased by 0.5% in
2014. Identical sales, excluding gasoline, decreased
by 0.1%. Sales growth was negatively impacted by
the closure of 14 stores, including the exit from the
New Hampshire market in 2013. This was partly
offset by the initial results of the program to improve
our customer proposition, and a business disruption at
one of our main competitors in the Stop Shop New
England division. In a highly competitive landscape,
market share was down slightly, mainly related to the
Giant Landover division.
At Ahold USA, our main focus in 2014 was on
the rollout of the program to improve our customer
proposition through targeted price reductions and
marketing, an improved Fresh offering, and an
enhanced customer experience through in-store
merchandising and associate engagement.
The program is largely funded through Simplicity
savings. In the 523 stores where we rolled out
this program so far, we saw encouraging volume
uplifts resulting in improved sales trends. We plan
to complete the rollout to all stores in the first half
of 2015.
During 2014, our U.S. business increased its
own-brand penetration by 0.5 percentage points to
37.6%, towards our ambition of 40% in 2016.
Our online business, Peapod, continued to grow in its
existing market area and opened 89 pick-up points
where customers can drive up and conveniently
pick up their online orders, bringing the total to 209,
To enable further growth, Peapod increased its
capacity by opening a new distribution center in the
New Jersey area.
Ahold USA achieved an underlying operating income
of $980 million, which was $84 million lower than
last year. Underlying operating profit margin at 3.8%
decreased by 0.3 percentage points.
Net sales amounted to €11.7 billion in 2014, an
increase of 1.8% compared to last year. For the full
year, market share at Albert Heijn increased slightly,
to 34.1% (source: Nielsen), positively impacted by the
conversion of 15 more former C1000 supermarkets
into our Albert Heijn format. By the end of 2014,
we converted 54 out of 82 stores following our 2012
agreement with Jumbo.
Other factors that positively impacted sales were
the continued growth of bol.com and the further
extension of our store network in the Netherlands
and Belgium.
Identical sales decreased by 0.5%. Similar to
last year, at Albert Heijn, transactions in identical
stores remained broadly stable while basket size
continued to be under pressure. Towards the end
of the year, basket size improved, positively driving
identical sales. In 2014, we started to roll out format
improvements to our larger Albert Heijn stores, to offer
more inspiration to customers, primarily in our Fresh
offering, and great value in dry grocery categories,
resulting in an enhanced store experience. We are
also pleased with the performance of our Albert
Heijn to go convenience stores in the Netherlands
that were remodeled to a new format.
In 2014, we further expanded our Albert Heijn
business in Belgium by opening an additional nine
supermarkets, bringing the total to 28 at year-end,
and are on target to operate at least 50 supermarkets
by the end of 2016.
Albert Heijn Online achieved double-digit sales
growth by opening an additional 17 pick-up points
for a total of 34, expanding its geographic reach
within the Netherlands and through the full-year
impact of doubling its assortment to over 20,000
products in 2013.
Ahold
Annual Report 2014
Bol.com delivered strong double-digit growth of over
25% in net consumer online sales, as in previous
years fueled by the launch of new categories
and accelerated growth in Belgium as well as
the success of Plaza, which offers a marketplace
to over 4,000 merchant partners and will be an
important driver in delivering on our 2017 ambition
of €2.5 billion.
Our net sales in the Netherlands consist of sales to
consumers and to franchise stores. Franchise stores
typically operate under the same format as Ahold-
operated stores. Franchisees purchase merchandise
primarily from Ahold, pay a franchise fee and receive
support services, including management training, field
support and marketing and administrative assistance.
The Netherlands reported an underlying operating
income of €574 million, which was €45 million
lower comparing to last year. The year-over-year
underlying margin was down 0.5 percentage points
to 4.9%. Excluding bol.com, underlying operating
margin was 5.2% (2013: 5.6%).
In 2015, margins in the Netherlands will be impacted
by increased investments in our online business,
particularly at bol.com. We expect this to have a
dilutive effect of 25 bps on the segment's underlying
operating profit margin. In addition, due to lower
interest rates, underlying operating profit margin will
be negatively impacted by higher defined benefit
pensions costs, up €23 million compared to 2014.
