Dutch retail giant Royal Ahold generated more in terms of revenue but suffered a major loss in income during the fourth quarter of the year, according to new figures released by the company. Sales for the period were up 5.1 per cent at constant exchange rates to €7.8bn, although operating income was down 52.4 per cent partly as a result of non-recurring items, it said, pointing out that its underlying operating income was in fact up 4.1 per cent to €355m.
For the full year, Ahold's net income was also down significantly, from €1.02bn to €827m. Chief executive Dick Boer commented: 'Our businesses continued to perform well in the fourth quarter. We grew sales and gained market share in all our markets. Underlying operating income increased, excluding €199m of impairments and non-recurring items related to pensions and restructuring charges.'
Ahold has spent the past 12 months pursuing a policy of restructuring dubbed Reshaping Retail, a strategy that has seen it act on changing trends in existing and new markets to capitalise on opportunities for growth. The shift in focus has seen it pull out of a long-standing joint venture with Nordic retailer Ica, while expanding its operations in Belgium, opening its first three Albert Heijn convenience stores in Germany, converting stores in the Netherlands and acquiring a handful of new stores in the US.
'We remain cautious in our outlook for 2013 but similar to 2012 we are committed to deliver on our Reshaping Retail strategy,' Boer said. 'We will stay focused on simplifying our business to reduce costs so that we can continue to improve our offering and the value we provide to our customers.'
According to Boer, shoppers were largely interested in price and promotions, without wishing to compromise on quality, during 2012. 'In response, we were able to simplify our business and save costs so that we could invest more into offering great value to our customers.' He also confirmed plans to increase targeted savings through cost reduction over the coming two years from €350m to €600m, committing the group to simplifying its business where possible, for example by improving existing commercial processes and boosting the profits made on own brands.
'As part of our strategy we are broadening our offering to customers. Our US businesses are improving their own-brand product lines to give customers more choices at different price points to fit their budgets,' he explained. 'We are building our online business on both continents to give customers more shopping alternatives, and we continued to achieve double-digit online sales growth in food.'
