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ZAANDAM, The Netherlands - Ahold NV today reported its first net loss in more than 25 years, due to hefty charges related to Argentina, and gave a conservative sales-growth target for 2003.
Ahold, the world's third-largest retailer behind Wal-Mart Stores Inc. and France's Carrefour SA, posted a second-quarter net loss of 197.5 million euros ($193.6 million), compared with a profit of 323.8 million euros a year ago.
The loss included a 410 million euro charge for the default of its former joint-venture partner Velox Retail Holding in Argentina, plus an 80 million euro write-down on the devaluation of the Argentine peso.
"This quarter Ahold reports its first loss in many years. That hurts because we are a proud company, always striving for excellence towards all stakeholders. Fortunately the cause is incidental and not structural. As communicated earlier, we had to take an exceptional charge as well as goodwill impairment for our Argentine operations. We think we have finally put this behind us and we can concentrate on reinforcing Disco's position as the best company in its market," said Cees van der Hoeven, Ahold President & CEO.
"Almost everywhere in the world, the trading environment is challenging. It is difficult to grow sales, and the outlook is not as yet improving. In these circumstances our performance is very solid, as we are able to grow market share and operating margins at the same time," van der Hoeven added.
In the United States, retail sales rose both organically and as a result of the consolidation of Bruno's Supermarkets with effect from December 2001. All retail operating companies contributed to sales growth, the company said. Organic retail sales growth amounted to 5.6 percent. Comparable retail sales growth was 2.1 percent, and identical retail sales growth totaled 1.4 percent. Lower fuel prices depressed identical sales by approximately 0.3 percent.
Operating earnings rose as a result of strong improvements at most operating companies and due to the consolidation of Bruno's Supermarkets. In particular, performance at Stop & Shop, Giant (Landover) and Giant (Carlisle) was excellent, the company said. Bi-Lo's operating earnings are improving, but still lower than last year; while Internet grocer Peapod -- where sales rose 19 percent -- reduced its operating loss to $7.6 million.
Ahold said it is targeting 4 percent to 5 percent organic sales growth for 2003. For the current year, it repeated its recently lowered full-year outlook of 5 percent to 8 percent earnings per share growth, excluding goodwill, impairment charges and currency impacts.
The retailer, which had a steady acquisition track record until last year, said that due to the challenging financial markets and its current stock price, it won't pursue any major acquisitions in 2003.