Owners: Strike cut into profits
Stop & Shop parent company says it took up to $110 million hit
The 11-day Stop & Shop strike in southern New England cut profit by $90 million to $110 million for the grocery chain’s parent company, it said Tuesday.
The lost profit at Ahold Delhaize, the Dutch corporate owner of Stop & Shop and other supermarkets in the U.S. and Europe, is due to reduced sales, expiration of perishable inventory that was discarded and supply chain costs, the company told investors.
“As a consequence, Ahold Delhaize now anticipates underlying operating margin for the group for 2019 to be slightly lower than 2018,” Ahold said.
Earnings per share is now expected to be up this year in the “low single digits” rather than the “high single digits,” Ahold said.
First quarter financial results are unaffected and in line with expectations, which will be released May 8. More details will be provided then on the impact of the strikes at Stop & Shop.
Ahold posted 2018 net income of $2 billion on sales of $62.8 billion.
To get back $100 million in cash flow “should be something within our capabilities,” Chief Executive Officer Frans Muller said on a conference call with industry analysts.
“I am pleased that Stop & Shop’s management and the five local unions have tentatively reached a fair and responsible contract in which all Stop & Shop associates are offered pay increases, eligible associates have continued excellent health coverage and eligible associates have ongoing defined benefit pension benefits,” he said.
The United Food and Commercial Workers called the strike April 11 as contract negotiations that began in mid-January broke down over health care costs, Sunday pay, wages and other issues. About 31,000 workers walked off their jobs at 240 Stop & Shop supermarkets in Connecticut, Massachusetts and Rhode Island.
It was the first strike against Stop & Shop in 31 years, and the earlier walkout lasted less than a day. The two sides reached agreement Sunday night, and workers returned to their jobs Monday.
The union has scheduled balloting for Thursday for workers to vote on whether to ratify the contract. Details of the pact are not being released.
An industry analyst said Stop & Shop could lose as much as 5 percent of its customers who might not come back after shopping at alternate stores.
Skyhook, a Boston- and Philadelphia-based company that collects location data from devices, reported the number of visits from Stop & Shop customers to all grocery stores declined about 50 percent on April 12-14 from the previous week and by 75 percent to Stop & Shop.
It said it analyzed data from mobile devices of 840 customers who typically visit Stop & Shop stores once a week in Connecticut, Massachusetts and Rhode Island.
Visits from loyal Stop & Shop customers jumped 300 percent to Hannafords, 115 percent to Market Basket, 75 percent to Trader Joe’s and 50 percent to Shaw’s and Star Market, Skyhook said.