By Stephanie Hamel and Charlotte Eugenie Yvette Bawol
(Reuters) -Supermarket group Ahold Delhaize beat second-quarter core profit margin expectations on Wednesday, supported by solid sales in its U.S. and European markets and cost control.
The group, which operates the Stop & Shop, Giant, Food Lion and Hannaford chains in the U.S. and the Albert Heijn and Delhaize chains in the Netherlands and Belgium, reported an underlying operating margin of 4.2% for April-June, topping the 3.9% expected by analysts polled by the company.
Sales rose 1.2% to 22.35 billion euros ($24.39 billion), also beating expectations of 22.14 billion.
Ahold Delhaize shares were up 4.4% at 0708 GMT.
“We are starting to benefit from structural changes in our business related to the Belgium Future Plan and cost savings initiatives in Europe and the U.S. that were initiated over the past 12 months,” CEO Frans Muller said in a statement.
Muller added that the underlying operating margin positioned Ahold Delhaize well to continue growth investments, while describing volume trends as “encouraging” in both regions.
The company pointed to increased promotional opportunities supported by vendors, as well as its broad assortment of private label products that appeal to cash-strapped customers.
In the U.S., where more than half of the company’s revenue is generated, major retailers including Target and Walmart have been pushing to keep prices on essentials low as many Americans shun big-ticket spending and turn to discount shopping in the face of sticky inflation.
As part of its restructuring efforts, the supermarket group announced in July the closure of 32 Stop & Shop stores in the U.S. by year-end.
The Amsterdam-listed group said it estimated the net impact of such closures on sales would be 150-250 million euros in the third quarter.
The company reiterated its full-year guidance for an underlying operating margin of at least 4%.
($1 = 0.9163 euros)
(Reporting by Stéphanie Hamel and Charlotte Bawol; Editing by Michael Perry and Mark Potter)
