Koninklijke Ahold Delhaize NV: Risks Beyond Stop & Shop

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Koninklijke Ahold Delhaize NV: Risks Beyond Stop & Shop

IdeaMand Kroger, while others face a different mix of regional competitors including ShopRite,

Costco, Market Basket and Shaw's. A simple overlap analysis risks understating the

potential impact, because historically, pricing investments by large operators have rarely

remained confined to the markets in which they originate, with competitive responses

often spreading more broadly across the sector. As a result, even regions with lower

direct exposure to Walmart, Kroger or Albertsons could face indirect pressure should

industry participants increase investment in value, promotions or customer acquisition.

Consequently, we believe Ahold Delhaize's exposure should be assessed not only through

direct market overlap, but also through the potential for broader industry-wide

reinvestment and margin pressure.

Against this backdrop, we question whether the $1bn cumulative price investment

programme announced at Ahold Delhaize's 2024 Capital Markets Day will ultimately

prove sufficient to maintain competitive price gaps across its US banners. Spread

across the four-year period through 2025-2028, the programme equates to approximately

1.7% of 2025 U.S. sales, or roughly ~42bps per annum. Substantial work has already taken

place across banners, which we detail at length below; in addition, we understand there

was a round of price investments on top of this during 2024 at Stop & Shop. While

meaningful, we do not view this as transformational in the context of the current US food

retail environment, particularly if competitive intensity accelerates as we expect. Of

course, pricing investment is rarely applied uniformly across the store base, with actions