Home 180323 Ahold Delhaize | Ranking the Stars
180323 Ahold Delhaize | Ranking the Stars

180323 Ahold Delhaize | Ranking the Stars

No. pages 35

Segmenting US players in 4 quartiles and 4 profiles
We published a new report (35 pages) featuring Ahold Delhaize. We kick off with the positioning of Ahold Delhaize's US banners vis-à-vis a very broad peer group including traditional and non-traditional retailers (approx. 50 banners). The ranking in 4 quartiles results from the quantification of the relationship between how consumers perceive a retailer with their emotional connection and these retailers' financial performance. Next, we dive deeper into the company's US performance, also vis-à-vis peers. Whilst Ahold USA's growth trend has slowed over time (also due to a less favorable demographics), Delhaize America's underlying sales growth has shown a recovery also illustrated by Hannaford's 15th quarter of positive comparable growth and Food Lion's 21st quarter of positive volume growth. Food Lion's sales density has continued to recover, although it is still considerably below peers.

Nothing is perfect; 'real' net synergies and the 'SCAD'
Ahold Delhaize's results and outlook, which were very decent, comfortable, and differentiates the company versus most if not all its peers. Having said that, nothing is perfect. Although FY18E will see another year of margin improvement - confirmed by the company -, we have a bit mixed feelings regarding the retention rate(s) of the company's net synergies. After all, the company's gross synergies and its ongoing 'Simplicity' savings already generate substantial ammunition to invest in its banners. A retention rate below 100% of net synergies could reflect cautiousness or simply confirm the industry's competitiveness. From a positive angle, Ahold Delhaize is at least able to improve margins and deliver strong free cash flows. Industry-wide, seemingly mergers and acquisitions are required to enhance margins. The latter issue (M&A) brings us to another topic, i.e. the 'solution' offered with regards to the Stichting Continuïteit Ahold Delhaize ('SCAD'). We believe this left most with ambivalent feelings.


     executive summary
1   Ranking the stars
2   There are challenges for Ahold Delhaize's US banners...certainly
3   A very decent performance & outlook, although not all is perfect
4   Attractive yields and valuation support positive stance
5   Appendix

Created Date: Friday March 23, 2018 17:05:33
Last Updated Date: Friday March 23, 2018 17:05:33
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