Ahold says Stop & Shop Easter strike will hurt 2019 margins
(Adds CEO and CFO quotes, updates share price)
AMSTERDAM, April 23 (Reuters) - Dutch supermarket group
Ahold warned on Tuesday that a strike its Stop & Shop
chain in the United States would hurt its underlying 2019 profit
margin, as it missed out on around $200 million on Easter week
Ahold said the 11-day strike which ended on Monday would
lead to a one-time reduction in underlying operating profit of
around $100 million due to lost sales and spoiled inventory.
"This is purely a one-time effect", Chief Financial Officer
Jeff Carr told reporters. "There is nothing other structural
that is affecting our guidance."
Ahold Delhaize said it now expects the underlying operating
margin for the group this year to be slightly lower than the 4.1
percent realised in 2018.
"Additionally, the percentage growth of underlying earnings
per share in 2019 is revised from high single digits to low
single digits", the company said.
CEO Frans Muller said the effects on sales and the supply of
supermarkets in the week before Easter had been
disproportionately higher than they would have been in a regular
"We were surprised by this unfortunate event", Muller said,
adding that overall the company had a good relationship with
workers' unions, including in the U.S..
Ahold shares were 3.3 percent lower at 21.31 euros by 0854
The strike involved 30,000 workers in Connecticut,
Massachusetts and Rhode Island. Ahold said all would receive
better pay, and those eligible would receive continued health
insurance and pension benefits.
The deal would have no impact on Ahold's goal of reducing
its overall costs by 540 million euros ($608 million) in 2019,
Ahold kept its full-year free cash flow estimates unchanged
at 1.8 billion euros, due to expected growth at its other chains
in the United States and Europe.
($1 = 0.8885 euros)
(Reporting by Toby Sterling and Bart Meijer; Editing by Kirsten
First Published: 2019-04-23 08:33:34
Updated 2019-04-23 11:22:24
© 2019 Thomson Reuters. All rights reserved. Reuters content is the intellectual property of Thomson Reuters or its third party content providers. Any copying, republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. "Reuters" and the Reuters Logo are trademarks of Thomson Reuters and its affiliated companies.