August 7, 2019 / 5:03 AM / in 7 months

Ahold second-quarter earnings hit by Stop & Shop strike

AMSTERDAM (Reuters) - Dutch supermarket operator Ahold Delhaize (AD.AS) reported lower second-quarter earnings on Wednesday, hurt by a strike at some of its U.S. stores in April.

FILE PHOTO: A logo of Gall & Gall is seen at the entrance of shop operated by Ahold Delhaize, the Dutch-Belgian supermarket operator, in Eindhoven, Netherlands, January 23, 2019. REUTERS/Eva Plevier

Underlying operating income fell over 11% to 594 million euros (£547 million) from a year earlier, narrowly missing analysts’ average forecast of 596 million euros in a company-compiled poll.

Ahold, which has its majority of business in the eastern United States, said in a statement that costs from the 11-day strike at Stop & Shop stores in Connecticut, Massachusetts and Rhode Island were 100 million euros in lost operating income.

Group sales rose by 1.5% to 16.3 billion euros in the second quarter.

“Although our results were impacted by the strike at Stop & Shop, our other U.S. brands continued their strong performance,” said Chief Executive Officer Frans Muller in a statement.

“As we continue to see sales performance improve at Stop & Shop, we expect no significant impact from the strike in the second half of the year.”

The company maintained its full-year 2019 goals of cutting costs by 540 million euros and generating 1.8 billion euros in free cash flow.

In the United States, sales were fractionally higher at 11 billion euros.

Stripping out the impact from the strike, from gasoline sales, and from the impact of the Easter holiday, U.S. comparable sales would have risen 2.3%, Ahold said.

In the Dutch market, where Ahold operates the dominant Albert Heijn chain, sales rose 3.8% to 3.68 billion euros, with an underlying margin of 5.2%, compared with 5.5% a year earlier.

Ahold is investing heavily in online grocery services such as home delivery and “click-and-collect” options, and is increasing its focus on fresh produce at many of its Dutch stores in an ongoing revamp.

It said online sales grew by 14% to 221 million euros in the United States, and by 25% to 554 million euros in the Netherlands.

Reporting by Toby Sterling; Editing by Subhranshu Sahu

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