The acquisitive Dutch-based supermarket group expects to meet its target of doubling in size between 1999 and 2002 early. By contrast, Carrefour's results suffered from a re-branding exercise that may cause it to lose its position at the top of the European supermarket league. Ahold could well overtake it.
Ahold's confidence that it can achieve its growth targets ahead of plan follows Tuesday's release of highly encouraging results, with sales for 2000 increasing by 56% to E52.5 billion, with pre-tax earnings up 53% to E1.6 billion.
During 2000 Ahold greatly increased the scale of its operations, mainly through acquisitions. In Europe, it bought a 50% stake in ICA, the leading chain in Scandinavia and the Baltic states. It has also targeted the fast consolidating Spanish grocery market, with an acquisition of Kampio and a share swap in Superdiplo. In America, it bought US Foodservice, which contributed E1.7 billion to profits, while at the same time rationalizing its store portfolio by converting Edwards supermarkets to its Stop & Shop format. It also bought a majority stake in Peapod, the struggling Internet retailer, to give it a platform for home shopping in the US.
Ahold has been continuing its policy in selected developing markets, improving results at its stores in Argentina, Brazil, Chile and Guatemala. But in Asia results were disappointing with sales falling 15% as the company sold stores in Singapore and Shanghai and continued to make losses in Indonesia and Malaysia.
With the business performing so well, Ahold will no doubt continue to make acquisitions to assure its position as the world's fourth largest supermarket operator. Moreover it is keen to close the gap on Carrefour, Europe's largest supermarket group since its merger with Promodes in late 1999. While Ahold has managed to improve sales and earnings by over 50% in 2000, Carrefour's sales only rose 25% and earnings a mere 15%. The rebranding of recently acquired stores including Promodes in France and Pryca and Continente in Spain under the Carrefour name held results back last year. Although Carrefour expects to regain the customers it lost during this upheaval, it can no longer guarantee its leadership of the European supermarket league with Ahold snapping at its heels.