Koninklijke Ahold Del Ord

Ladies and gentlemen, good morning and welcome to the analyst conference call on the third quarter 2024 results of Aarhus Delhaes. 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, third quarter 2024, and also in Ajo del Jez's public filings and other disclosures. Ajo del Jez disclosures are available on ajodeljez.com. Forelooking statements reflect the current views of Ajo del Jez's management and assumptions based on information currently available to Ajo del Jez's management. Forelooking statements speak only as of the date they are made, and AHA Delhares 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 AHA Delhares. At this time, I would like to hand the call over to J.P. O'Meara, Senior Vice President, Head of Investor Relations. Please go ahead, J.P.

Thank you very much, Sharon, and good morning, everyone, from Zandam. I'm delighted to welcome you to our Q3 2024 results conference call. On today's call are Franz Muller, our president and CEO, and Jolanda Pootsbile, our CFO. After a brief presentation, we will open the call for questions. And as usual, if you can hold the questions to two today, that would be great. 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, aholdeles.com, which also provides extra disclosures and details for your convenience. 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'll hand the call over to Franz.

Thank you very much, JP, and good morning, everyone. I'm pleased to report that our performance has continued to be solid and consistent in the third quarter. In a dynamic market environment, the quality of execution is extremely important. And as I reflect on where we are with our business, I'm encouraged by the opportunities we are creating for future growth, while at the same time staying focused and not taking anything for granted. Maintaining deep and close relationships with our customers is at the heart of our approach. with more than 7,700 stores, 16 great local brands, 400,000 people. Our track record of customer centricity, innovation, reliability, community and connection has yielded strong number one and number two positions in the nine countries we operate in. On that note, I would like to thank all of our associates for their dedication and commitment to serving their local customers and communities, particularly in times of need. The devastating floods in the Czech Republic, wildfires in Greece, and the disruption and destruction caused by Hurricane Debbie and Helen in the southeastern U.S. had a tremendous impact on the affected communities. And also in communities where we source products, like we saw in the Valencia region last week, These events are now becoming more sudden and unexpected. I'm proud of our brands for their immediate responses and hard work to support disaster relief with, for example, FoodLine donating $3.8 million and over 1 million pounds of product and food to support impacted communities and to address recovery and rebuilding efforts. Albert in the Czech Republic, sending six truckloads of humanitarian aid to be distributed through food banks and directly to crisis centers in the affected area, and Alpha Vita in Greece, supporting local authorities, fire brigades, and volunteer firefighters impacted by the wildfires in northern Attica with product donations. Events like these remind us of the vital role our store plays in the heart of our communities, and the strength of those close relationships contribute significantly to our consistent success as a business. Speaking of success, I'm encouraged by the strong progress we are making strategically and operationally. Managing a business with low top-line inflation and high-cost inflation is a challenging task and requires a lot of discipline. Our track record of keeping our own house in order is a big advantage and certainly paying off. But the best remedy to any challenging environment is to focus even harder on your core growth levers. For us, that is our growth model. And this is exactly what we're doing as part of our growing together strategy. So let me give you some color on that. And there are three areas I would like to focus on in my remarks today. The first area is the holistic approach we are taking by building seamless platforms to drive our omni-channel customer growth ambitions. We know for a fact that an omni-channel customer spends more with us in our most mature markets and therefore by infusing more life and more content and transforming our loyalty programs to lead with digital first, we aim to drive omni-channel loyalty sales penetration to over 80% by 2028. Advancing and leveraging our online fulfillment capabilities and our loyalty programs play a super key role here. In the third quarter, our group online sales increased 12.4%, excluding the divestment of FreshDirect, and this driven by both new customer growth and strong customer retention across both regions. In the US, we continue to see strong growth in both our click and collect and third-party marketplace channels. And over the last 12 months, we have increased our click and collect locations by over 70 new locations, and we are seeing a positive impact of our transition to native apps as conversion rates increased by almost 10% in the past quarter. In addition, US customers are responding positively to our partnership with DoorDash, where we have seen 40% increase in the number of orders in the third quarter compared to the second quarter. In the Netherlands, Albert Heijn's online business, which has been one of the brand growth drivers for many, many years, experienced a step up in growth resulting in continuing double-digit sales growth. To keep up with growing demand, Albert Heijn has increased customer accessibility through the strengthening of the logistics network and increased capacity at the home shop centers. Our second mechanized home shop center in Zwolle in the eastern part of the country is hitting or ahead of all of its milestones, enabling the brand to supply groceries to even more customers in the northeast of the Netherlands. And with now 20% of our orders in the Netherlands being serviced in an automated way, I'm excited that we have a strong recipe for success and can scale this part of our business in an efficient and sustainable way. Albert Heijn's loyalty program also continues to go from strength to strength. Albert Heijn has been on a great digitalization journey over the last years. And customers have noticed, and we have seen the number of monthly active users at Albert Heijn increasing to 4.5 million. Just today, Albert Heijn announced their next innovations to help customers by launching multiple in-house developed GenAI-based solutions in the app. And the most impressive one is a digital Gen-AI assistant that helps customers answer the question, what's for dinner tonight? While growth from online is certainly exciting, another key growth lever, which is proving very powerful for us, is densifying and growing markets through a vibrant and modern store network. Investing more in our winning propositions, introducing customer-focused upgrades like expanded product assortments, Unlocking more efficiency in store operations and shifting more capital to our most profitable and more obvious growth opportunities are important parts of our growth philosophy and how we deploy capital. In the US, Food Lion completed its 167 store remodeling program in the Raleigh-Durham market, bringing our latest omnichannel concept to one of the brand's largest markets. This follows the Wilmington and Greensville markets which were already launched during 2023. And constructions on our 152 store in the Charlotte market have now started and this project will be completed in the course of 2025. Raleigh-Durham and Charlotte are our biggest markets for FoodLine. In Europe, year to date, we have invested in 261 new stores and remodels. Our modernized stores in Europe offer an expanded ecosystem of integrated products and services that align with customers' evolving preferences, as well as featuring upgraded facilities with new cooling and heating installations. A few highlights include that, for example, Albert Heijn celebrated the one-year anniversary from the moment the first Young Linder stores joined the Albert Heijn brand. with sales outperforming expectations. Alphavita continued to expand their franchise network with the acquisition of another six stores from a local chain. And last, but certainly not least, in Belgium, Deles has finalized the store transitions that were part of its future plan, with the last store, number 128, converting this week. I would like to thank all the affiliates and associates in Belgium for their support. and hard work over the past 18 months. The entrepreneurial mindset of our affiliates combined with the expertise of associates is a strong combination. Customers vote with their feet, and the results so far from the transitions are very strong. Stores have been converted for a year or more and experienced double-digit growth in sales compared to pre-conversion, and many of the converted stores are already reaching the performance levels initially forecasted for the second, third, or even fourth year. This is also confirmed by the strong market share recovery, with market shares for the less recovering to well above pre-announcement levels. Finally, on page 12, the third aspect I would like to highlight today is the pace at which we are taking some of the medium to longer-term opportunities we are working to unlock with our new strategy. First good example is Stop and Shop. At Stop and Shop last weekend, we completed the closure of the 32 underperforming stores we previously announced in July. The team also did a very good job in limiting the non-recurring pre-tax financial impacts on our 2024 IFRS results by finding good solutions, and some of which are with our other industry partners. With the project now behind us, the team under the leadership of Roger Wheeler is moving forward with our revitalization strategy, including further stepping up price investments as previously outlined in May at our Strategy Day. For example, Stop and Shop recently announced a number of changes to improve its shopping experience, starting with all the 25 stores in Rhode Island. These actions include lowering everyday regular prices on thousands of items across national and private brand products. On average, customers will benefit from reductions in pricing of 3,500 products. This step forward in Rhode Island builds on top of price investments that we started earlier this year, as we roll out store-wide price investment at selected stores in targeted markets, combined with new in-store marketing concepts. to bring these changes prominently to life. Although we are in the first phase of our campaigns, customers' feedback is positive, with volumes beginning to trend better at locations where interventions have been made. Another good example of unlocking our medium-long-term potential with growing together are the opportunities contained in our growth driver Innovate for Growth and Efficiency. With our growing together plan, we committed to increasing the share of investments towards, for example, accelerating innovation capability, accelerated existing business models, and developing new business models for B2C and B2B customers. Let me give some examples of some of the new things we launched in the quarter. Al Deleuze USA now offers enhanced in-store audio solutions for further empowering consumer packaged goods to engage customers with personalized real-time messaging to create a multi-sensory in-store experience. We announced the expansion of our technology studio AD01 in Romania with the opening of additional offices. And this is accompanied by the recruitment of another 30 employees as part of a team dedicated to innovation in web and mobile app development, e-commerce, data loyalty systems, promotions, and core retail solutions. Ball has built its own tool for advisors on the platform, putting them fully in control of everything around sponsored products. And this helps to solve customer problems faster. delivering more value for our advertisers, shoppers, and the organization. And lastly, Albert Heijn further developed their dynamic markdown technology to include non-perishable products. And this is a perfect example how our investments in technology and innovation can contribute to multiple aspects of our growth strategy. And with the technology, we're able to strengthen our customer value proposition by providing customers access to quality products for a low price, support our commitment to reducing food waste, and contribute to our annual Save for Our Customer program, giving us the ability to invest back into our business. While there is still plenty of hard work ahead to deliver the full potential of our strategy, 2024 is giving us a good start for the road ahead. with solid year-to-date underlying results, we will continue to keep a good pace of investments in the fourth quarter to drive momentum into the new year. And at the same time, we will remain agile and will continue to be prudent as we balance our short-term goals with our long-term aspirations. As I said in my opening, in our line of business it's all about quality execution, quality sales, quality brands, quality customers, and of course, quality people. And this is what we believe in as a management team at Aldeles. And as a final note for today, I'd like to welcome Claude Seray, who joined our management board as CEO of Europe and Indonesia on October the 1st. Claude brings a lot of energy and experience to the team at an exciting and interesting time for our European operations. With that, over to you, Yolanda, to share more about the financials and outlook for the remainder of the year.