The Dutch food group, whose chains include Albert Heijn in the Netherlands and Shop & Stop in the US, shouldered the bulk of food price inflation rather than passing it on to customers and staged big price promotions during the Euro 2008 football tournament.
Ahold reported second-quarter net sales of €5.8 billion (£4.66 billion), down 0.8 per cent, although at constant exchange rates there was a 7.3 per cent rise.
Operating income fell 14.2 per cent to €235 million (£189 million). Retail operating income was 247 million, giving an operating margin of 4.3 per cent versus 5.1 per cent in the same period last year.
Ahold chief executive Jim Rishton said: “We continued to invest in price and gave increased focus to promotions, both of which helped to drive sales and win customers, but, as anticipated, impacted margins.
“We are confident we will manage the balance between sales growth and margin, and deliver our underlying operating margin guidance for 2008.”
Bernstein analyst Christopher Hogbin said: “Management guidance continues to imply margin recovery in the second half. However, there is little visibility into the drivers of this – sales leverage, cost savings…”
Ahold last week unveiled a new logo and brand-building initiatives at Shop & Stop and Giant-Landover in the US, as part of a “global strategy to build powerful local consumer brands”. Ahold has also been running a Value Improvement Program in the US to strengthen consumer appeal.