Ahold Delhaize Growth ambitions could temporarily weigh on margins
At the end of May, Ahold Delhaize held its strategy day in the Netherlands and announced new ambitions for the period 2025-2028. Although the cumulative FCF guidance of € 9 bn was broadly in line with expectations, the underlying drivers were slightly different, including higher than expected sales growth ambitions but a more nuanced margin outlook. After adjusting our estimates, we expect margins to dip below the 4.0% mark in 2025, driven by restructuring and price investments at Stop & Shop. However, we expect this to be offset by strong sales growth in the following years, driven by new store openings and customer wins. This while maintaining the 4.0% margin in the long run. We reiterate our Buy rating and increase our TP from € 32.0 to € 32.5ps.Koninklijke Ahold Delhaize is an international group of supermarket and foodservice operators based in Europe and the U.S. Co. operates supermarkets and convenience stores. In addition, Co. provides online food retailing services. Co. also finances, develops and manages store sites and shopping centers. Ahold Europe comprises Albert Heijn in the Netherlands and Belgium; Etos, Gall & Gall, and albert.nl in the Netherlands; and Albert / Hypernova in the Czech Republic and Slovakia. Ahold USA is organized into four retail divisions: Giant Carlisle, Giant Landover, Stop & Shop New England, and Stop & Shop New York Metro. The Peapod online business is also part of Ahold USA.
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