Ahold Delhaize Q1 Results Signal Resilience Amid Retail Challenges

Ahold Delhaize, one of Europe’s largest supermarket groups, delivered a resilient first-quarter 2025 performance, with net sales of €23.3 billion exceeding analyst estimates and underscoring its strategic adaptability in a volatile market. The results highlight the company’s ability to navigate headwinds—from geopolitical tensions to shifting consumer preferences—with disciplined execution across pricing, digital innovation, and sustainability.

Sales Growth Outperforms, Driven by Acquisitions and Digital Momentum
Ahold Delhaize’s Q1 net sales rose 5.0% at constant exchange rates, surpassing consensus estimates of €23.05 billion. The acquisition of Profi, a Central and Eastern European retailer, added 2.9 percentage points to sales growth, while online sales surged 13.7% at constant rates. This digital boom was particularly pronounced in the U.S., where Food Lion’s online sales jumped nearly 40%, and in Europe, where bol’s home and appliance offerings and Albert Heijn’s smart delivery algorithms fueled a 10.1% rise in online sales.

The U.S. division, which accounts for nearly 60% of Ahold’s sales, grew 1.8% at constant rates despite store closures and price investments. Food Lion’s 50 consecutive quarters of positive sales growth and Hannaford’s 15-quarter streak exemplified the region’s resilience. Meanwhile, Europe’s sales soared 10.1% at constant rates, aided by Profi’s integration and Albert Heijn’s expansion of its AH Terra own-brand line—now offering 350 products with everyday low prices.

Margin Pressures Offset by Strategic Priorities
Underlying operating margins dipped to 3.8% (a 0.2 percentage point decline), primarily due to U.S. price investments, such as Stop & Shop’s remodels and Giant Food’s “Fresh Low Prices” initiative. However, European performance—particularly in the Benelux region—compensated for margin pressures in Central and Southeastern Europe (CSE). CFO Jolanda Poots-Bijl noted that price adjustments in the U.S. were “priced to win,” with early signs of volume recovery in remodeled stores.

Investor Confidence and Strategic Roadmap
The results buoyed investor sentiment, with shares rising 3.4% pre-market and a 18.6% year-to-date return. Ahold reaffirmed its 2025 outlook: a ~4% underlying operating margin, mid- to high-single-digit EPS growth, and €2.2 billion in free cash flow. Key to this trajectory are its omnichannel investments—€1 billion allocated to U.S. stores over four years—and a focus on profitability in online grocery by 2026.

Sustainability initiatives also advanced, with Ahold aiming for 50% plant-based food sales by 2030 and recently setting a scope 3 emissions target aligned with a 1.5°C climate scenario. These goals, while ambitious, align with growing consumer demand for ethical choices and could strengthen brand loyalty.

Risks and Mitigation
Geopolitical risks, particularly in CSE markets, remain a concern, as does currency volatility and tariff pressures. Ahold’s response includes localized sourcing and dynamic pricing models. For instance, the closure of 30 underperforming Stop & Shop stores in 2024—reducing Q1 sales by ~1%—was offset by price resets and renovations at 200 stores, which improved foot traffic.

Conclusion: Ahold’s Balanced Growth Model
Ahold Delhaize’s Q1 results reflect a disciplined balance between growth and profitability. With online sales growing at double-digit rates, own-brand expansion, and targeted price investments driving market share gains, the company is well-positioned to meet its 2025 targets. Despite macroeconomic uncertainties, its emphasis on omnichannel infrastructure, loyalty programs (e.g., AH Premium’s 25% increase in personalized offers), and sustainability differentiates it in a crowded retail landscape.

The data underscores this: comparable sales excluding gasoline rose 3.3% group-wide, online penetration hit record levels, and diluted EPS grew 4.6% to €0.62—beating estimates. As Ahold continues to prioritize customer-centric strategies and operational agility, investors can expect sustained resilience, even as it navigates a challenging environment. For now, the results suggest that Ahold’s “Growing Together” strategy is bearing fruit.