The supermarket chain Ahold Delhaize (AD.AS) saw a 7% decline in its shares on Wednesday after cutting its profit forecast for 2023 and pointing out margin pressure in its primary market, the United States.
Retailers are feeling pressure on their margins as food price inflation declines and customers cut down on their spending, which has bolstered their profitability over the last two years due to rising prices.
The company, which runs the Albert Heijn and Delhaize chains in the Netherlands and Belgium and the Stop & Shop, Giant, Food Lion, and Hannaford chains in the United States, now projects 2023 underlying earnings per share to be marginally lower than last year’s level. Previously, the company had launched an annual profit to align with 2022.
According to a statement from Ahold, U.S. margins expanded less than anticipated in the third quarter, but the company predicted that this pressure would pass in a few quarters.
“The reduction in emergency federal Supplemental Nutrition Assistance Program (SNAP) benefits, higher interest rates, and the resumption of student loan repayments in October continue to weigh on customer sentiment,” Frans Muller, the company’s CEO, said of the U.
Muller said, “All of this, along with persistently high inflation, created further anxiety for many customers.”
He pointed out that consumers purchased more of the company’s less expensive private-label products. “What we see in trends is that customers’ wallets and household budgets are more constrained,” he added.
The company is relying more on private-label items for the approaching holiday season. It plans to draw consumers in with deals on Thanksgiving turkeys and the opportunity to exchange loyalty points for free seasonal goods like pumpkin pie.
For the third quarter, the group’s underlying operating income was 839 million euros, less than the 856 million euros predicted by the business.
