8:00AM New York - Dutch supermarket Royal Ahold reported net sales in 2007 rose 1.2% year-on-year to €28.2 billion.

The food and grocery retailer Royal Ahold revenue edged a fraction in 2007 as it struggled to improve its retail margins, refocus its business to retail operations, and enhance growth. For the year 2007 retail margins improved to 4.5% and the company estimates margins to rise to 5% in 2008.

Fourth Quarter Review

Royal Ahold reported revenues in the fourth quarter ended December 31st rose 0.2% to €6.6 billion as retail operating income advanced to €289 million.

For the quarter, net income gained €22 million from a year ago to €262 million on higher operating income and net financing expense. Retail operating income in the period grew by €51 million from the previous comparative quarter to €253 million.

Annual Earnings Review

Royal Ahold reported that net sales in the year ended December 31st gained 1.2% on the year to €28.2 billion. For the year, net income climbed by €2 billion a year ago to €2.9 billion as a result of divestment of U.S. FoodService and Polish operations and Tops. Operating income in the year also advanced €71 million to €1.1 billion. The company proposed a dividend of 0.16 euros per common share.

The company sold in mid-2007 its Food Service business to Clayton Dubilier and KKR, private equity fund managers for $7.7 billion. U.S. food services represented 46% of 2006 revenue.

Segment Review

Stop & Shop / Giant-Landover

Fourth quarter net sales in the segment increased 2% from a year ago to $3.9 billion, while identical sales rose 2.7% at Stop & Shop location in the U.S. and declined 0.5% at Giant-Landover.

Stop & Shop operates supermarkets in Massachusetts, New Hampshire, Connecticut, Rhode Island, and NY and New Jersey. Giant-Landover operates retail stores selling food, pharmacy, health and beauty care items and general merchandise in Maryland, Virginia, Delaware, and the District of Columbia.

Operating income was $38 million lower than a year earlier at $124 million as the company absorbed costs related to the promotions and restructuring amounting to $19 million.

Net sales in the year gained 1.5% to $16.7 billion. Same stores sales climbed 1.3% at Stop & Shop and declined 1.1% at Giant-Landover.

Giant-Carlisle

Fourth quarter net sales at Giant-Carlisle increased 8.6% on the year to $1 billion driven by the acquisition of Clemens Markets in the fourth quarter of 2006. Comparable sales at the same locations in the period gained 4.8% and operating income increased by $6 million to $43 million. The division operates stores in Pennsylvania, Maryland, and West Virginia.

Annual net sales gained 13% to $4.3 billion as the acquisition of Clemens Markets in the fourth quarter of 2006 positively impacted on profits.

Same store sales gained 3.7% and operating income increased by $24 million to $194 million.

Albert Heijn

The acquisition of Konmar stores resulted in fourth quarter net sales increasing 12.9% to €2 billion.