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August 21, 2009

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Ahold beats forecasts

ROYAL Ahold NV, the Dutch operator of US grocery chains Stop & Shop and Giant, yesterday reported a 42 percent fall in net profit for the second quarter due entirely to the sale of operations in the previous year.

Analysts said the results beat expectations, and shares rose 3.5 percent to 8.434 euros.

Net profit was 195 million euros (US$278 million), down from 336 million euros in the same quarter a year earlier, when Ahold booked a 162 million euro gain from the sale of its Schuitema stores in Europe.

Ahold said that, stripping out the impact of discontinued operations in both years, profits would have risen 8.5 percent. Sales rose 11 percent to 6.43 billion euros, and the company managed to improve margins to 4.8 percent from 4.3 percent despite the economic downturn.

Ahold's strategy in the US, where it generates two-thirds of sales, has been to offer "value," meaning relatively cheap prices for good-quality groceries. CEO John Rishton said the company was "well positioned" to increase profits in future quarters.


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