Ahold Delhaize drops after warning of lower profit

Bloomberg

Royal Ahold Delhaize NV’s stock dropped after the Stop & Shop owner said it expects lower earnings per share this fiscal year as inflation weighs on consumers and the industry grapples with continued supply chain disruption.
The retailer said it expects underlying earnings per share to decline by low- to mid-single-digits this year. The shares dropped as much as 5.8%, most since March 2020.
“We’re expecting sales will grow, but I don’t think they’re going to grow at the same rates as 2021,” said Chief Financial Officer Natalie Knight. Ahold had said in December it expected the business could become tougher in the coming months.
The expected EPS decline follows on from two years of strong development during the pandemic, Knight said.
Inflation in the Netherlands accelerated to 7.6% in January, the highest level in data going back to 1997.
In the euro area, consumer prices unexpectedly jumped an annual 5.1%, remaining more than double the ECB’s 2% target.
Unilever Plc, the maker of Ben & Jerry’s ice-cream, said last week higher energy and raw material costs will dent profitability for two years.
While supply chain disruptions, inflation and rising costs as well as the expected easing of government subsidies to consumers pose challenges for the industry in 2022, Ahold said its underlying operating margin is expected to be at least 4%.
Last year, Ahold said it’s considering an initial public offering for Dutch online retail unit Bol.com as the pandemic-fueled boom in e-commerce attracts investors’ interest.