Ahold Reaffirms 1.7% Margin for U.S. Foodservice

Spokesman Walter Samuels confirmed statements made by Anders Moberg, ceo, who was speaking at a Dutch investor day seminar.

The Dutch retailer is targeting an operating margin, excluding goodwill impairments, of more than 1.7% at its Columbia, MD-based U.S. Foodservice division for 2006, as well as 5% sales growth and a 5% operating margin at its retail activities for that year.

Ahold's comments, made at the publication of second-quarter results in September, still apply, the Samuels noted. At the time, announcing that it has returned to profitability, Royal Ahold NV also reported that U.S. Foodservice is continuing to recover from its accounting debacle.

Ahold has maintained that it is "optimistic" about U.S. Foodservice's future and does not plan to sell the unit. Ahold had said it would announce a strategic plan for the unit's future in November. Ahold said in 2003 that it would take 18 to 24 months to get U.S. Foodservice's finances in order and see significant performance improvements. Net sales at U.S. Foodservice, in U.S. dollars, fell by about 2.7%, officials said.

U.S. Foodservice's gross margin for the first half of 2005 rose by a percentage point from full year 2003, officials said then. Ahold also indicated that it expects adjusted operating margins at the distributorship would exceed 1.7% by no later than 2006.

For some months now, analysts have been questioning whether Ahold will be able to reach the targets, and the shares reacted negatively to yesterday's statements, falling to a low of 5.85 euros ($6.83) yesterday after earlier trading higher.


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