Dive Brief:
- Royal Ahold NV, which owns the Stop & Shop and Giant retail chains in the U.S., reported a 0.5% drop in operating income to $425 million, or 390 million euros, missing analysts' estimates.
- Ahold's underlying operating margin also dipped from 4% a year ago to 3.5% this past quarter, which Ahold CEO Dick Boer attributed to "investments in growth across our businesses and a one-off insurance charge," he said on a conference call.
- Sales, however, ticked up 14.9% on the strength of the dollar. Sales dropped by 2.1% at constant rates in the U.S., where Ahold sees about two-thirds of its business — a hit mainly caused by lower gas sales.
Dive Insight:
Earlier this month, Ahold announced it was in early discussions regarding a possible merger with Delhaize Group, which operates Food Lion stores in the U.S. That deal would reportedly generate savings of up to 600 million euros, which could help the chains deal with stiff competition from other retailers. Boer did not comment on the potential merger on the conference call.