Koninklijke Ahold Del Ord

ladies and gentlemen good morning and welcome to the analyst conference call on the second quarter 2024 results of our hotel hazer please note that this call is being webcast and recorded please note that in today's call forward-looking statements may be made all statements other than statements of historical facts may be forward-looking statements such statements may involve known and unknown risks and uncertainties that could cause actual results performance or events to differ materially from those included in the statements Such risks and uncertainties are discussed in the interim report second quarter 2024 and also in Aarhus Delhaize's public filings and other disclosures. Aarhus Delhaize disclosures are available on aarhusdelhaize.com. Forward-looking statements reflect the current views of Ajo del Herza's management and assumptions based on information currently available to Ajo del Herza's management. Forward-looking statements speak only as of the date they are made and Ajo del Herza does not assume any obligation to update such statements except as required by law. The introduction will be followed by a Q&A session. Any views expressed by those asking questions are not necessarily the views of Ajo del Herza. At this time, I would like to hand the call over to JP O'Meara, Senior Vice President, Head of Investor Relations. Please go ahead, JP.

Thank you, Sharon, and good morning, everyone, from sunny Zandam. I'm delighted to welcome you to our Q2 2024 results conference call. On today's call are Franz Muller, our President and CEO, and Yolanda Putzbile, our CFO. After a brief presentation, we will open the call for questions. In case you haven't seen it, the earnings release and the accompanying presentation slides can be accessed through the investor section of our website, ahosles.com, which also provides extra disclosures and details for your convenience. To ensure everyone has the opportunity to get their questions answered today, I ask that you initially limit yourself to two questions. If you have further questions, then please feel free to re-enter the queue. To ensure ease of speaking, all growth rates mentioned in today's prepared remarks will be at constant exchange rates unless otherwise stated. And with that, I hand over to Grant.

Thank you very much, JP, and good morning, everyone. I'm pleased to report a strong second quarter, placing us well on track to achieve our strategic objectives and financial goals for the year. 2024 is a very important year for us as we position ourselves for long-term profitable and sustained growth. To that end, we launched our refreshed company strategy, Growing Together, internally and externally in May, which many of you attended. At the same time, our current business is performing well. We saw solid and improving momentum at our brands in both regions. Our omnichannel capabilities, the strength of our own brand assortment, as well as our hard work on the cost side to fund investment in our customer value propositions are paying off. Stripping out the noise in our revenue numbers from calendar, exiting tobacco in the Netherlands, the Deleuze future plan, and the fresh direct divestment. Stripping off those, I'm very encouraged by the steady and sequential improvements in comparable sales growth numbers in both regions. And Jolanda will give you more details later. We have further strengthened our relative position in key markets. We have created some headroom in our profitability base in the U.S. to support growth investments. And our European margin recovery is well underway as we look ahead. I would like to thank our more than 400,000 associates for these solid results, supporting and serving our customers at every step, taking the initiative to simplify our business and for embracing our new strategy with enthusiasm and energy. As a reminder, the key elements of our growing together strategy are captured in our growth model. These are investing in our winning customer value proposition, CVB, densify and grow markets, innovate for growth and efficiency, and leverage and lower our cost base. This quarter, I would like to spend some time on densify and grow our markets. Important elements of this pillar over the coming years include a more pronounced organic store growth and remodeling program in the U.S., further leveraging our Benelux stronghold through Albert Heijn and Deleuze and capturing new growth opportunities in the CSE region with new store openings and with accretive bolt-ons such as Profi and therefore bringing scale and synergies. On the flip side, making the necessary interventions when brands are challenged to elevating the quality of our sales and operations such as the stop-and-shop measures I will talk about later. In terms of strong organic growth, with 47 consecutive quarters of comp store sales growth, Food Lion exemplifies how a clearly defined long-term plan, persistent and consistent execution can lead to great results. The recently remodeled Wilmington and Greenville markets are delivering in line with expectations. And with only seven stores under construction, and 158 stores completed. We plan to complete our total initiatives in the rally markets later this summer. In Europe, Albert Heijn's market share gains continue, with the brand also seeing impressive double-digit growth in online sales. We are capturing new growth opportunities in the CSE region, with 18 net store openings during the quarter, and continued growing our own brand assortments. We are also nearing the closure of the Profi acquisition, which we expect to happen during the fourth quarter. In Belgium, Deleuze is approaching the final phase of store transitions as part of its future plan. We anticipate the team will have converted all the stores in Q4. To date, 180 stores have transitioned to their new owners. We are very pleased with the results thus far, with store sales customer frequency, and basket size all trending upwards. And this is also confirmed by a strong market share recovery, with market shares now exceeding pre-announcement levels. On slide 11, finally, let me give you a brief update on stop-and-shop. We recently announced the first major step for the next phase of our stop-and-shop revitalization work, with a planned closing of 32 underperforming stores to be completed in Q4. The estimated net impact of these closures on our top line is expected to be between $100 and $125 million in the second half of 2024 and between $550 and $575 million in the total year of 2025. We also expect to recognize a non-recurring pre-tax charge between 160 and 210 million dollars in the third quarter of 2024. Closing stores in our industry is never an easy moment, and we have done our utmost to minimize disruption for our associates, for our customers, and for the local communities of these impacted stores. However, it is an important step that is needed to create a healthy store base for the long-term and to focus our investments to strengthen and grow the brand again. And as we said in May, we are committed to further investments in price and in the customer experience. A great example of this is the opening of the newest flagship Stop & Shop Alston store in Boston in June, featuring an extended produce department with more local fruits and vegetables, a carefully curated assortment of products for the wide range of cultures and communities in the area, and the newest price and promotion programs. Investments like these tie to one of the other key elements of our growth model, investing in our winning customer value proposition. We know strengthening our competitiveness in the existing network always brings the fastest and highest return on investment. And in May, we announced we would step up our price investments across all brands in the US by $1 billion for the period 2025 through 2028. It will build on price investments and interventions in the current year, which are predominantly focused on Stop and Shop and the giant food company in 2024. A great example of this is the Compare and Save campaign, where we are emphasizing the value of own brand products compared to national brands. Although we are in the first phase of the campaign, Initial feedback is positive with higher sales in both dollars and units. In Europe, we are also investing in our CVP by further increasing our range of price favorites. We now have roughly 700,000 EDLP SKUs, up almost 15% compared to last year. This is an important value driver as our data shows that the sales out of these SQs are a substantial contributor to our sales growth. And finally, let me spend a moment of innovate for growth and efficiency, which includes ramping up our capabilities to drive complementary income streams. This quarter, Al DeLess USA announced its retail media network is partnering with placements.io. a platform that will further streamline its sales, advertising, and finance operations for its consumer packaged goods partners. In Europe, the Gambit technology, which is our retail media platform through our investments in Adhese, is next to Albert Heijn, now also live at both Alva Vita and DLS Belgium. In addition, Albert Heijn has added new functionality, making it easier for advertisers to activate sales and strengthen their brands, thanks to Albert Heijn's wide reach. For example, video advertisements are now possible on aha.nl and in the Albert Heijn app. With that, let me summarize by repeating that 2024 is an important year in setting the scene as we pivot to our ambitious growing together strategy. Everything I see at the moment gives me confidence that our brands are taking the right steps, moving at the right pace, and leveraging the strong foundation of our business to accelerate growth. Now over to Yolanda to talk more about the financials and the outlook for the remainder of the year.