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    Royal Ahold Beats Q4 Targets, Shows Progress in U.S

    Royal Ahold said this morning that it had a strong fourth quarter and fiscal 2007, exceeding the financial targets it had set, and delivering an underlying retail operating margin of 4.6 percent against its own guidance of 4 to 4.5 percent.

    Royal Ahold said this morning that it had a strong fourth quarter and fiscal 2007, exceeding the financial targets it had set, and delivering an underlying retail operating margin of 4.6 percent against its own guidance of 4 to 4.5 percent.

    Of its accomplishments for the fiscal year, CEO John Rishton of the Amsterdam-based supermarket conglomerate, which derives about 60 percent of revenue from the U.S., said: "We largely completed our planned divestments, returned 4 billion euros to shareholders, and our investment grade rating was reinstated. We restructured the company into two continental platforms and achieved reductions in corporate center costs ahead of schedule. We are progressing with our strategy for profitable growth."

    The company reported fourth quarter net profits of approximately 9 percent, beating analysts' forecasts. The grocer reported quarterly profits of 262 million euros ($397.8 million), up from 240 million a year ago and versus an average forecast of 159 million euros in a Reuters poll of analysts.

    In the U.S., Rishton said, the company's rollout of its VIP price cut program increased to 70 percent at the Stop & Shop and Giant-Landover chains by fiscal year-end, "while Giant-Carlisle continued its strong performance."

    Rishton said the company plans to complete the rollout pf the VIP program at Stop & Shop and Giant-Landover, and start of the remodeling of Giant-Landover stores.

    At Stop & Shop/Giant-Landover, fourth quarter sales were $3.9 billion, up 2.0 percent from the same period last year, Ahold said. Identical sales were up 2.7 percent at Stop & Shop (1.2 percent excluding gasoline net sales) and down 0.5 percent at Giant-Landover. Operating income was $124 million - or 3.2 percent of sales - down $38 million from the same period last year. Margins were affected by price investments related to the further roll-out of the Value Improvement Program as well as by restructuring and related charges of $19 million, said Ahold.

    For the full year, sales at the duo of chains were $16.7 billion, up 1.5 percent compared to last year. Identical sales were up 1.3 percent at Stop & Shop (0.6 percent excluding gasoline net sales) and down 1.1 percent at Giant-Landover. Operating income was $663 million - or 4 percent of sales - down $176 million compared to last year.

    At the Giant-Carlisle division, fourth quarter sales hit $1 billion, up 8.6 percent compared to last year, due in part to the acquisition of Clemens Markets in the fourth quarter of 2006. Identical sales were up 4.8 percent (3.8 percent excluding gasoline sales). Operating income increased by $6 million to $43 million or 4.2 percent of sales.

    For the full year, Giant-Carlisle sales were $4.3 billion, up 13.0 percent compared to last year, due in part to the acquisition of Clemens Markets. Identical sales were up 3.7 percent (3.2 percent excluding gasoline sales). Operating income increased by $24 million to $194 million or 4.5 percent of net sales.

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