Higher food prices help Ahold top Q3 forecasts

Thu Nov 17, 2011 4:14am EST
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By Mark Potter

LONDON (Reuters) - Dutch grocer Ahold AHLN.AS beat forecasts with a 5 percent rise in third-quarter profit as it gained market share and managed to pass on higher food costs to cash-strapped shoppers in its main U.S. business.

Chief executive Dick Boer said on Thursday that was largely because U.S. competitors had also increased their prices, and did not reflect a stronger consumer.

"Customers remain cautious in their spending and focus on value in an inflationary environment," he told reporters.

Boer said it was proving more difficult to pass on higher food costs in Europe and that the euro zone debt crisis had dealt a further blow to already fragile consumer confidence.

However, he added that had not yet led to a deterioration in spending, with trading so far in the fourth quarter little different from the third.

Many retailers across Europe and the United States have been struggling as shoppers' disposable incomes are squeezed by rising prices, subdued wages growth and austerity measures.

Belgium's Delhaize DELB.BR, which like Ahold makes most of its sales in the United States, said last week business conditions were getting tougher, while world No.1 retailer Wal-Mart WMT.N on Tuesday missed third-quarter profit forecasts.

Ahold, which runs Dutch market leader Albert Heijn and makes about 60 percent of sales in the United States, said it made an operating profit of 300 million euros ($406 million) in the 12 weeks to October 9.   Continued...