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    Ahold Revs Up 'VIP' Revamp in U.S. after 'Good Progress' in Q3, YTD

    AMSTERDAM -- Ahold here said it will accelerate the pace of its ongoing Value Improvement Program [VIP] at Stop & Shop and Giant-Landover, after its interim financial report for the third quarter and first three quarters of 2007 reflected the "good progress," according to newly named president and c.e.o. John Rishton.

    AMSTERDAM -- Ahold here said it will accelerate the pace of its ongoing Value Improvement Program [VIP] at Stop & Shop and Giant-Landover, after its interim financial report for the third quarter and first three quarters of 2007 reflected the "good progress," according to newly named president and c.e.o. John Rishton.

    The VIP program "remains on track, with almost half the program completed," noted Rishton in a statement. "The progress made so far has enabled us to accelerate the program, and we now expect to complete 70 percent by year-end, up from the previous target of 50 percent. In October we announced a major three-year remodeling program of more than half of our Giant-Landover stores and the agreement to sell the remainder of our Tops operation.

    For the third quarter, net sales were 6.3 billion euros (US $9.4 billion), a rise of 1.1 percent from the year-ago period. Operating income was 255 million euros (US $379 million), 44 million euros (US $65 million) more than last year. Retail operating income was 282 million euros (US $419 million), an operating margin of 4.5 percent vs. 4 percent in the same period last year. Net income was 214 million euros (US $318 million)), an increase of 4 million euros (US $6 million) from the year-ago period.

    Year-to-date net sales came to 21.5 billion euros (US $32.0 billion), up 1.5 percent from last year. Operating income was 881 million euros (US $1.3 billion), 20 million euros (US $30 million) higher than the year-ago period. Retail operating income was 978 million euros (US $1.5 billion), an operating margin of 4.5 percent compared with 4 percent last year. Net income was 2.7 billion euros (US $4.0 billion), a rise of 2 billion euros (US $3 billion) from the year-ago period, as a result of the divestment of U.S. Foodservice and Ahold's Polish operations.

    At Stop & Shop/Giant-Landover, third-quarter net sales were $3.7 billion, a 0.3 percent increase from last year. Identical sales for the quarter rose 1.2 percent at Stop & Shop (1 percent excluding gas net sales) and declined 1.8 percent at Giant-Landover. Operating income was $150 million – 4 percent of net sales – a decrease of $15 million from the year-ago period. Margins were affected by price investments related to the continued rollout of VIP.

    Year-to-date net sales at Stop & Shop/Giant-Landover were $12.8 billion, a 1.4 percent rise from the same period last year. Identical sales grew 0.8 percent at Stop & Shop (0.4 percent excluding gas net sales) and fell 1.3 percent at Giant-Landover. Operating income was $539 million (4.2 percent of net sales), down $138 million from the year-ago period.

    At Giant-Carlisle, third-quarter net sales were $977 million, an increase of 13.1 percent from last year, partly attributable to the acquisition of Clemens Markets in the fourth quarter of 2006. Identical sales during the quarter rose 2.5 percent (2.3 percent excluding gas net sales). Operating income grew by $5 million to $38 million, or 3.9 percent of net sales.

    Year-to-date net sales at Giant-Carlisle were $3.3 billion, a rise of 14.4 percent from the year-ago period, partly due to the Clemens Markets acquisition. Identical sales went up 3.3 percent (3 percent excluding gas net sales). Operating income grew $18 million to $151 million, or 4.6 percent of net sales.

    Rishton also said that the company's recently completed share buyback program has returned a total of 4 billion euros to shareholders this year, and that Ahold planned to reinstate an annual dividend on its common shares, with the proposed dividend for the 2007 financial year due to be announced with the company’s full-year results in March.

    As for guidance, "For our total core retail operations, we expect the operating margin for the full-year 2007 to be at the higher end of our previous guidance of 4 percent to 4.5 percent," noted Rishton.

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