Koninklijke Ahold Delhaize N.V. ($AD)

Ladies and gentlemen, good morning, and welcome to the analyst conference call on the First Quarter 2026 Results of Ahold Delhaize. Please note that this call is being webcast and recorded. During this call, Ahold Delhaize anticipates making projections and forward-looking statements. All statements other than statements of historical facts may be forward-looking statements. Forward-looking statements are subject to risks, uncertainties and other factors that are difficult to predict and that may cause our actual results to differ materially from future results expressed or implied by such forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements. The introduction will be followed by a Q&A session. Any views expressed by those asking questions are not necessarily the views of Ahold Delhaize. At this time, I would like to hand the call over to JP O'Meara, Senior Vice President, Head of Investor Relations. Please go ahead, JP.

Thank you very much, Heidi, and good morning, everyone. I'm delighted to welcome you today to our Q1 2026 results conference call. On today's call are Frans Muller, our President and CEO; and Jolanda Poots-Bijl, our CFO. After a brief presentation, we will open the call for questions. In case you haven't seen it, the earnings release and the accompanying presentation slides can be accessed through the Investors section of our website, aholdelhaize.com, which also provides extra disclosure and details for your convenience. To ensure everyone has the opportunity to get their questions answered today, I ask that you initially limit yourself to queue. To ensure ease of speaking, all growth rates mentioned in today's prepared remarks will be at constant exchange rates unless otherwise stated. And with that, I hand over to you, Frans.

Thank you very much, JP, and good morning, everyone. We had a solid start to the year. Our Q1 performance reflects the strength of the foundation we have built with our Growing Together strategy, focused on delivering value for customers, associates and all our stakeholders and this every day. This is underpinned by clear choices, investing in our customer value proposition, strengthening our portfolio and expanding our footprint while maintaining discipline in how we allocate capital. We continue to operate in a dynamic and at times more demanding environment. Food inflation was more moderate in this quarter with year-over-year deflation in several categories, which has been helpful to consumers. At the same time, geopolitical tensions, including the recent conflict in the Middle East, are contributing to uncertainty. Energy prices are elevated, putting further pressure on household budgets. This is not necessarily new for us. We have managed through similar conditions before, and we are applying those learnings today. For example, customer value remains at the heart of everything we do. Across our brands, we continue to invest in price, in quality and in relevance. -- whether through our own brands or fresh offering or the experience in our stores and digital platforms. In an environment like this, consistency builds trust and trust drives share. Secondly, we remain disciplined in how we run the business. We focused on cost, on productivity and on simplifying how we operate, but always with the flexibility to support our brands locally. We have strengthened our energy position by moving to longer-term contracts and increasing the use of renewable energy sources. And we are further embedding shoot cost models to ensure cost increases from suppliers are proportional, transparent and well managed. And lastly, we continue to invest in the future. We are sharply focused on our growth model, combining scale, relevance and execution. And whether in digital, in data or in omnichannel capabilities, we are building a platform that allows us to serve customers in more relevant and more personal ways. These factors gelling well together enable our strong financial performance and our ability to deliver consistent and attractive returns for our shareholders. Looking at the quarter. Net sales and comparable sales, excluding gasoline, increased 2% at constant exchange rates. We delivered an underlying operating margin of 4% and diluted underlying EPS increased 8.9%. When we launched our strategy together -- when we launched our strategy going together, I talked about quality. It's a defining characteristic of the culture of how we operate our company, the quality of our sales, the quality of our brands, the quality of our execution and foremost, the quality of our people. And that's the lens I would like to use as we look at our results today. Customers continue to navigate the environment carefully, making deliberate choices and seeking value. Our response is clear, strong, consistent customer value. Across our U.S. brands, excluding some technical and macro factors, Jolanda will go through in more detail, our first quarter sales performance kept a similar pace to the trends we have seen last year. And inside this growth, we are enhancing own brand assortments, executing our second full year of on top price investments and optimizing personalized offerings. Own brands continue to outpace the rest of the store in both sales and volume, supporting price perception and margin quality. And at the entry level, we are playing into the growing demand from customers who are looking for high-quality products at affordable prices. Examples for the U.S. includes Stop & Shop lowering everyday prices across key states, Hannaford introducing refreshed own brand packaging to improve navigation and value perception and the Giant Company launching its Simply low campaign. At Stop & Shop, Roger and the team are leveraging strong local knowledge. Volumes are trending positively. Online penetration is at record levels and own brand growth is strong. Customer response to price investments remains encouraging, and NPS continues to reflect strong engagement by customers to the actions we are taking in the day-to-day quality of our execution. As we have now seen several quarters of consistent improvement at Stop & Shop, we will accelerate our store remodel program and expand our price investment across the full fleet by the end of 2026, with over 40 targeted store remodels planned for '26 to further improve the in-store experience. Staying with quality sales growth. In Europe, performance was a little ahead of where we had anticipated. Our brands continue to strengthen their positions through relevance and execution. And the key developments here include the Del Food acquisition, adding over 300 convenience stores in Belgium, continued rollout of Delhaize affiliate model to 7 new locations, offering customers the best Delhaize standards with appealing assortments, the latest digital experiences and great local customer service. And we made progress in Serbia following the end of government pricing measures. Simultaneously, our European brands are using their own brand propositions to play a leading role in innovation across our store. Recent success stories include, for example, Albert Heijn's recently renewed barbecue assortment with over 80 new products right on time for the sunny weather. Alfa Beta's award-winning own brand range called AB close to the Greek Land, highlighting their commitment to high-quality products inspired by the richness of the Greek gastronomy and local production. And to support customers who have faced ongoing pressure on their household budgets, Maxi Serbia significantly stepped up their own brand offering. Switching gears now, and let's talk about the quality of execution. Our omnichannel proposition continues to scale. And for example, in the U.S., online sales grew 14.3% at constant exchange rates, marketing the eighth consecutive quarter of double-digit growth. Over 90% of customers have access to online shopping and more than 90% of online sales are fulfilled through same-day services. At Ball, where consumer discretionary spending in general is less robust than last year, we are on top of the rapid changes in customer behavior with AI and social commerce reshaping how customers shop. Maite and her team are expanding Ball's suite of AI-powered tools, including the soon-to-launch shopper agent, ensuring customers have the support they need throughout their total shopping journey. In Romania, we have merged [indiscernible] into one legal entity under the leadership of Xavier. Xavier, who has an extensive track record at [indiscernible] Ma, recently served as Brand President at Delhaize Belgium and brings deep expertise in driving change. The synergy capture from the integration is progressing well, which will provide fuel as we speed up space expansion in the quarter ahead. As we focus on the quality of execution, technology helps us secure it for the future, bringing greater consistency, efficiency and precision at scale. And with technology and innovation, we stay curious and disciplined, exploring early and scaling only when our customers are ready and it fits our business. Our approach to AI is a good example. Under the leadership of Jan Brecht, we have brought 30 experts together in a group focus area to speed up execution and learning and the power of our portfolio is we can trial and learn a lot quicker than a single operator, and this is similar to what we did with things like retail media or mechanization. As you see with outcomes like EDGE, our European -- U.S., European retail media application and our fully mechanized e-commerce fulfillment centers in the Netherlands, we test and learn quickly and scale what works. For AI, we concentrate on 4 domains: sourcing and merchandising, marketing, store operations and agentic shopping. And with more than 100 active use cases, we are already capturing value by improving availability and freshness, optimizing pricing and assortment decisions and increasing operational efficiency in stores. And again, we can integrate these across the system. We really see compounding effects. As we build on our existing AI-supported store associate app in Albert Heijn, we are moving towards a self-optimizing store. Here, AI serves as the store's brain, reading every signal and orchestrating work across people, systems and devices, including electronic shelf labels. And lastly, before I hand over to Jolanda, I'd like to spend a few moments on the quality of our people and the strength of our distributed operating model. What continues to set us apart is the strength, experience and passion of our local teams. They are closest to the customer, owning the business in real time and making decisions every day that truly count. And around them, our support functions continuously improve, simplify and strengthen the system so that our brands can perform at their best. As you will have seen from this morning's announcement, the Supervisory Board has completed a thorough process to identify Thierry Garnier as my successor. And in the meantime, I remain fully committed. We have a clear strategy that is focus and is delivering results. My priority over the coming periods is exactly where it should be. strengthening the foundations for the long term and deliver on our promises in the short term, but also working with our teams, keeping the business on track and continuing to execute with discipline and consistency. Now over to you, Jolanda, to talk more about the financials.

Well, thank you, JP, and thank you, Frans, and good morning to everyone. Reflecting on the current market environment, customers remain both resilient and selective. They are adapting, seeking value, making deliberate choices and increasingly rewarding consistency and trust. Picking up from Frans, staying closely in sync with the environment and being closely connected to customers with our local teams is a strength. Our proximity to customers and strong footprint of stores are an asset. With 77 million customers shopping with us every week, our primary data gives us insight into changing needs. from price sensitivity to convenience and seasonal trends. It allows us to respond locally at speed and execute our strategy at a cadence that we carefully adjust as conditions evolve. I'm pleased with our Q1 performance as it reflects discipline in action and the solid start to the year provides us with space to be agile as we trade through the coming quarters and continue to invest in prices to support our customers and drive growth. Let's have a look at the key underlying numbers for the quarter. Net sales grew 2% to EUR 22.3 billion. While the sales growth rate was less robust than in prior quarters, our sales were resilient. We are pleased with overall positive volumes, which underscores that our strategy is fit for purpose as we are relatively outperforming the market. Health continues to be a key differentiator. As demand grows for high protein and healthier options, products like our high-protein yogurt and cottage cheese are among our best sellers with around 30 new high-protein items planned for this year. Over 50% of own brand sales already come from healthier products. We are now expanding our ambition across the full store, making healthier choices more accessible, more affordable and more relevant. Our underlying operating margin was 4%. Strong performance in the U.S. and an increase in insurance results at Ahold Delhaize Group more than offset the effect of the governmental decree and intervention on grocery industry prices in Serbia. Diluted underlying earnings per share was EUR 0.62, up 8.9%, primarily driven by higher underlying operating profit and the impact from the share buyback program, partially offset by higher financial expenses and income taxes. Slide 18 shows our results on an IFRS reported basis for Q1, which were in line with our underlying performance. For your convenience, Slide 19 provides our comparable store sales trends with and without adjustments for weather, calendar and other notable items. Looking at the regional performance in more detail. U.S. net sales were EUR 12.7 billion. Comparable sales, excluding gas, increased 1.5%. Top line performance reflected a mix of factors. Weather and calendar with a positive impact of 40 basis points. Pharmacy sales were impacted by the Inflation Reduction Act with a negative impact of 70 basis points, Ag prices normalizing sharply versus last year, a negative impact of 65 basis points and the SNAP program changes reduced the benefits available to lower-income customers with a negative impact of 55 basis points. Together, these factors reduced our growth rate by 1.5 percentage points. Underneath this, volumes remained stable and our competitive position is strong, demonstrating the resilience of our model. To help with your modeling for the coming periods, here are a few things to remember. We now expect an approximate $450 million impact on U.S. reported and comparable sales for the year from pharmacy pricing. EX will impact Q2 top line, but to a lesser extent as market prices stabilized gradually as we moved into the second half of the prior year and reduced SNAP benefits to continue to put pressure on our lower income customer with uncertainty around the exact magnitude and trajectory of these changes. We will closely monitor the impact throughout the rest of the year as changes in the program are deployed. Underlying operating margin in the U.S. was 4.6%, up 20 basis points from the prior year. Higher sales leverage and a favorable mix from winter storms, the positive margin effect from cost deflation in and the favorable mix in pharmacy more than offset price investments and additional costs related to the winter storms. In the U.S., our omnichannel proposition continues to be a strong growth engine and one of our key competitive advantages. We finished Q1 with a record high penetration level of 10%, with some of the brands already above 11%. Our customers value our partnerships with third parties as our network allows to further expand the accessibility and convenience of our online services to existing and new customers. In Q1, online sales through these channels grew by over 20%. We recently welcomed Uber Eats to our network. We are excited about the growth opportunities ahead, especially given Uber Eats strong urban presence and membership program, allowing us to tap into new audiences. Turning to Europe. Sales were EUR 9.6 billion. Comparable sales grew 2.7%, excluding the net impact from calendar shifts at the end and the end of tobacco sales in Belgium. We have now fully cycled the impact of tobacco sales. Online sales grew 3.3%, while online grocery sales grew 7.4%. Albert Heijn performance was negatively impacted by severe winter conditions, which disrupted delivery capabilities in January. Adjusted for this, Albert Heijn online sales grew by double digits. Performance at Ball was impacted by the cycling of a strong prior year and increased consumer pressures, contributing to down trading within Ball's assortment. Underlying operating margin in Europe was 3.4%, down 10 basis points from the prior year. The realization of synergies and a lower turnover tax rate or IMCA in Romania, partially offset the impact from the governmental decree in Serbia, which was in effect through February. Now that the degree has ended, our teams are executing recovery plans as we rebuild our position in the market. We are assessing the impact of the new law on unfair trade practices or UTP, which was adopted in April in Serbia. New rules on temporary labor in the Netherlands are coming through and planned increases to the used minimum wage take effect from 2027. We are addressing the high cost pressures through tight cost control, productivity improvements and operational efficiencies. Moving on to Slide 22. Q1 free cash flow was a negative EUR 330 million, driven by net working capital due to the calendar and seasonal phasing between the quarters and year-on-year. This is largely timing and our 2026 guidance for the full year remains unchanged. We invested EUR 600 million in growth capital expenditure. Our brands are well on track with our store remodeling program, elevating our store fleet and integrating the latest innovations to offer our customers a seamless shopping experience while growing our complementary business models. We also opened 41 new stores, including 2 new Food Lion stores. And in February, the giant company announced the acquisition of 2 family-owned stores in Pennsylvania, which will open later this year. That wraps up my financial review of Q1 and brings me to our outlook. Given the solid start of the year, we reconfirm our guidance. While external rigs have increased, we remain confident in our plan. This summer period, we have strong activation plans in place to drive volumes and market share. We will also step more aggressively into price investments as we time our activities to capture the big moments of the summer period. Although we do not provide specific quarterly guidance, phasing effects in and between the quarters are to be expected as we flow investments in line with real-time trading conditions, allowing us to stay sharp and calibrate actions while always keeping an eye on our full year goals. In closing, we build our growth model not just to navigate challenging conditions, but to perform through them and to grow with them. In times like these, performance isn't driven by big statements. It shows up in those everyday moments when customers choose our brands because they trust the value we offer. This is in our culture, the strength of our local teams, their know-how and their passion to serve their customers in real time, supported by systems and central skilled competencies, which continue to improve and simplify how we work. Together, this gives our business model a lasting edge and gives us the confidence in delivering sustainable long-term value. And with that, I thank you for tuning in. And Heidi, please open the lines for questions.

[Operator Instructions] The question comes from Will Woods from Bernstein.

Congratulations, Frans, on a long and impressive tenure at Ahold Delhaize. I'm sure we'll be speaking on the next few earnings calls. But my first question is about management change. You obviously are obviously experiencing a lot of management change at the moment with you, JJ and Claude leaving your respective CEO positions. I think many investors are worried about an exodus of management only a few years into the Growing Together strategy. How can you give confidence to investors in the continuity of the business strategy and its performance? And then the second question is on U.S. margins. You've obviously seen strong expansion year-over-year. How much of this is driven by the favorable mix effect versus underlying business trends like gaining share? And how sustainable do you think it is?

Thank you very much, Will. On the U.S. margins, Jolanda will give a few comments. On the management change, I will. It's, of course, a sad thing that we see both JJ and Claude decided to leave the company, especially also JJ with 36 years in the company and a big contributor to the success of our company and a Growing Together strategy. And the same for Claude, who did a lot of very good work in Europe on the sourcing, on the digital piece, on the own brands piece and also strengthening the organization in itself. But again, it's also up to them to make those decisions to leave and to adopt another proposition out there. Having said that, we have a strong company on talent and succession planning. We have already catered for the right processes. Myself, together with the Supervisory Board, are working on the succession planning for both JJ and Claude. That is progressing well. And the other thing is one thing we should not forget is that we have super strong brands operating locally in the market with their own teams with very good functions and very good officers also dealing with those functions. So we have a very robust and strong organization in general. And that's also what we have dealt with in the past when we had management changes that robust organization, well-trained, experienced, knowing the markets very well was a very good catalyst to run these kind of transitions and making sure that we stay in the safe waters of delivering on our Growing Together strategy. And that's exactly our plan, not only for this year, Will, but also for fulfilling the coming years of Growing Together, which so far has been a successful plan. So that on management change, U.S. margins, Jolanda?

Yes. And thank you for the question, Will. We indeed do not guide on margin, as you're aware, on the regional level and the guidance of around 4% was reiterated with confidence. If I look at the U.S. margin, there are many levers, as always, to be mindful of. There's indeed whether the calendar impact that we disclosed. which is incidental. We have some upside from the deflation as we call it. So the egg prices went down, which negatively impacted our sales but had a slight uptick in our margin, which will phase out in the coming quarters. We had a slight uptick from pharmacy in our margin, but also our structural profitability of our online business, which is improving, contributes to the positive result. And also, we see a slowly but surely improvement in shrink level. And that, of course, combined with price investments that we're making and that will continue in the quarters to come. So I hope that this gives some background on the buildup of our U.S. margin.

The next question comes from Xavier Le Mene from Bank of America Securities.

Two, if I may. The first one, can you please comment the food inflation you're seeing and potentially across region with the kind of exit rate you've seen in Q1? And maybe if you can comment on April, just to understand if you've seen any change given the Middle East crisis, that would be the first question. The second one is about the consumer behavior. So do you have any concern going forward? And where are your expectation or has it changed from what you said back to February and what you've seen right now? So do you see consumer behavior changing? And do you have any concern going forward?

Thank you for your questions, Xavier. I'll start with the consumer behavior question. if you look at our strategy, which was launched in 2024, it was centered around the customer and the customer being, one could say, on the hunt for value. We see that customer value focus intensifying in a way. But our strategy ties into that. We disclosed at the launch of the strategy that we were stepping down on our own brand penetration, and we aim at 45% for the group, offering consumers those own branded products at low prices and high quality levels. So that is a part that ties into that consumer behavior trend. The second part, of course, relates to our price investments, EUR 1 billion additional price investments in the U.S. alone, and we are well on track to execute them, and we also see the positive response in, for example, in our volumes because our volumes in the U.S. were stable, whereas market data indicates that the overall market was highly negative. So the initiatives we took to support consumer trends and the hunt for value are playing out. In general, we see consumers seeking for convenience. So our online step down ties into that. We see that ready-to-eat and ready-to-heat solution are gaining traction, and we see that healthy options, as I referred to also in my short introduction, is also gaining traction. But it all ties down to our Growing Together strategy. So we're quite well prepared to respond to that. Maybe, Frans, you want to allude on the first question?

Xavier, on inflation. When we look at the U.S., we always work at this food at home Northeast inflation level. That was for us 2.1% in the first quarter, coming down from 2.4% in the Q4. That is for the U.S. And that differs, of course, by category. We see some elevated categories like cereals and bakery, but also we also see a big category like dairy coming down and the same for the eggs, as Jolanda already mentioned before. When we look at Europe, the food at home in the Dutch market, 1.7%, coming down from 3.7% in the fourth quarter. So that's a full -- 2 full percentage down. And in Belgium, almost flat with 0.1% coming down from 2.9% in the fourth quarter, just to give you an idea about the biggest market we have. And there's a little bit of mixed bag in the CSE countries but also their inflation, for example, in the Czech Republic and Serbia came down quite a bit.

The next question comes from Sreedhar Mahamkali from UBS.

First of all, Frans, really many congratulations on the update on your retirement next year. I think your achievements really speak for themselves that Ahold Delhaize and Delhaize prior to that over the last decade plus. So I think a super clear transition plan with a long period of gestation that you put in place, all very appreciated. Thank you for all this over the years. And maybe just a couple of questions. Firstly, I think you've just referred, Yolanda, I think, to some phasing in the U.S. margins. In the release, you talked about accelerating Stop & Shop investments in the U.S. by the end of 2026. How much of the change is it versus your prior plans? And does that mean we should be a little bit more so to expect on the U.S. margin outperformance that we've seen perhaps in the last couple of quarters or so? So that's the first question. Secondly, also, I think, Yolanda, you've talked about a couple of regulatory changes you are assessing in Serbia and the Netherlands. would be amazingly helpful if you could talk through what is changing and how we should think about it maybe at all for the rest of the year or into 2027, that would be very helpful.

Thank you, Sreedhar, and also thank you, Will, for the good wishes. I take them on board, but to be honest, you have to work for. We are in full flow for delivering on '26 and teams are ratio sharp focused in a dynamic time as we have now. So you can count on me for the full year to make sure that we deliver. But on a few questions, Sreedhar, Stop & Shop and pricing or U.S. in overall. You know that we said earlier for our 4 years strategy, $1 billion on price investments in U.S. spread equally over the years. And so also within the year, intra-year, it's spread equally over the quarters. And we had earlier the question already, does Stop & Shop get a much higher proportion of that piece. And we also said also Stop & Shop gets its proportional part of the pricing. But we will see a second round of pricing in the U.S. as we promised and as we also can afford because we have a delivered higher margin in the U.S., as you can see. So there's some space and some room to invest there, and we have a growing Together strategy. So we go for sales and volume growth in the U.S. And we already shared with you some very good news on Stop & Shop, if it's NPS, if it's market share, if it's volume growth. And there also for Stop & Shop, you will see quite some good investments on pricing coming in the coming weeks and throughout this quarter as well. I'm very proud about Roger and the team. They understand now where elasticity is, and we see good uptakes there. And also that's together with our own brand proposition for Stop & Shop. We are getting in the right space of getting Stop & Shop back on its feet. Too early to call victory, of course, but happy with the investments we're going to make regulations.

Regulations. Yes, if we look at the 2 ones I highlighted, and Sreedhar, thank you for your questions. The 2 that I highlighted was the first one around Serbia. So indeed, the governmental decree and intervention on grocery industry pricing has ended, but it did impact our Q1 results, both in top line and in UOP. So that will phase out as we rebuild our market position in the quarters to come. What I also referred to in Serbia was the so-called UTP that will not impact sales nor our margin. It could impact our free cash flow directly, of course, because it impacts the payment terms that we have. We are assessing that impact. Overall, as we said earlier, we reiterated our guidance also on free cash flow. So we think we can manage around that one. Then the last one I shared was on the wage inflation in the Netherlands, which is quite substantial also going forward. So we need to offset that where we can with productivity improvements, increased efficiencies, et cetera. And as you are aware, we also have a steep cost reduction program, again in place of EUR 1.25 billion, and we're well on track to deliver on that, which then supports us again.

The next question comes from Rob Joyce from BNP Paribas.

Yes, I just want to echo Sreedhar's comment about Frans. I wish you all the best, but it was a year to go. Questions. So U.S., I guess, can we -- are we isolating a sort of consumer slowdown purely to SNAP customers? Or are we seeing a more broader slowdown? And should we read those price investments as broader reaction to what's happening in the market at the moment? Or are they purely proactive? And then the second one is just Frans. I'm guessing you're going to have some kind of handover period with Thierry at some point. Just to understand what you think he should be focusing on and where you'll be directing his attentions as he takes the role.

Thank you for the questions. I'll take the first one, and Frans will talk about your handover question. we are phasing our price investments in an optimal way to drive growth with a sharp eye on the results that we promised to the market. We're not responding to the immediate changes that we see because, as you know, we already disclosed that we would invest heavily in prices at the start of our strategy.

Yes. And I would dare to add to that story, Jolanda, also that we're seeing quite positive momentum at the moment in the U.S. We -- relative to our competition, we have better volume numbers. We see sales picking up. We see a number brand reacting very positively to our price investment, own brand propositions and the improvement of our execution. So that momentum we will use through the summer to make the right price investments and to see where we can find some acceleration. On the handover, I think that is much -- is it too early -- much too early again. I think what we have to do ourselves in this year and in this 12 months out, we have a strategy which you know. We have a market which is dynamic. So we will make some intelligent tweaks to our strategy to find the right proposition for our customers in a sentiment where they are. We have Jan Brecht on board, our new CTO, quite a lot of energy on looking at our technology, digital, loyalty, AI agenda and we make very good progress on that also with the U.S. and the European teams. So that does -- that means that we will have a stronger tech background in the investments we make, making sure that we are getting better seamless proposition for our customers. So that development you also will see in 2026. And I'm pretty sure that with the plans we have now, with the delivery, the foundation we have, we'll give a very good set of ingredients also for my successor to build on this and to have, of course, also from his view, a fresh look and perspectives as well, which we all would appreciate. So solid foundation, a lot of things happening. And I think in the coming quarters, you will hear more about the new elements of how we're going to tweak our Growing Together strategy to serve our customers even better.

Just sorry, to follow back on that SNAP customer. Is it really only the SNAP customers you're seeing sort of change in behavior in? Or are you starting to see a more broader change in U.S. customer behavior?

Overall, the SNAP impact is the most visible one. And we have been talking about the customer being on the hunt for value for quite a while. If you look at the general context in the world, of course, there is a lot of uncertainty and there is the risk of inflation getting higher, and that will impact the markets that we're operating in at large. And that is the information that we have at this point in time.

The next question comes from Fernand de Boer from Degroof Petercam.

Actually, one follow-up question and one other question is on the follow-up on the price investments you're making or going to make in the U.S., this comes on top of -- to be clear, is this on top of the EUR 1 billion? Or is it part of the EUR 1 billion? That's the first question. And then on Europe, could you say a little bit on the market share trends for Albert Heijn and Delhaize in Belgium and Albert Heijn, of course, in the Netherlands?

Yes. Thank you for your questions, Fernand. No, the price investments we talk about are part of the EUR 1 billion that we disclosed when we had our Strategy Day. So it's deploying the announced EUR 1 billion. in a certain phasing to optimize growth versus the UOP that we get back for it.

And then, in our Dutch and Belgium markets, we're seeing continuation of the trend. That means Albert Heijn is gaining further market share. Albert Heijn in Belgium is gaining further market share. Delhaize in Belgium is gaining further market share and Ball is very stable on its market share. So very content with the developments in the Benelux. And it's nice to see that our Delhaize colleagues in Belgium after the big operation, they are really trending better than original business plan. And that is nice to see and that is the situation on the market shares in the Netherlands and in Belgium.

Maybe one follow-up on Jolanda, in your prepared remarks, you mentioned something -- is the quarterly performance going to be more volatile, but full year performance should be still in line with guidance? Is that the way we should read it?

Yes, that's more referring to the cadence that we choose because we are phasing to optimize also, for example, in view of the summer period ahead, where to deploy, which price investment to get the biggest return for that investment. So that is just the phasing throughout the year.

The next question comes from Francois Digard from Kepler Cheuvreux.

Two questions on my side. First, on online sales. They remain quite impressive in the U.S. Could you help us understand what is attributable to new partnership on one hand and the higher demand on the other end? Given the timing of the partnership secured in '25, should we expect this growth rate to moderate over the course of the year? And my second question is on group margin. What is the main reason for maintaining the guidance despite a stronger-than-expected Q1? Is it the intention to accelerate at Stop & Shop, geopolitical concerns, something else?

Jolanda volunteered to give an answer on the group margin.

I always like that topic, Frans.

And I will talk a little bit more about the online sales growth. It's quite impressive, 14.3% in the quarter. We have a record high 10% penetration of online sales in the U.S., the eighth consecutive quarter, as Jolanda already mentioned, on double-digit online. Where is that coming from? It's coming, first of all, from all the brands. Food Lion stepped in a little bit lower, so they have higher -- even higher growth rate than the 14%. But Stop & Shop is still the company in our total network with the highest online penetration. We work with the Click & Collect system where -- through which 90% of our customers have access to our online proposition and more than 90% is access to online same-day proposition. And the other thing is that we also work with those partners. So if you -- if we would give you a little bit of idea, roughly 60% of our total sales, online sales is coming through the Click & Collect proposition, which is our own facility and our own sweating the stores and network. We made quite some adjustments in reducing our assets in the last 2 years. So it's really sweating our own stores. And the other 40% is coming through marketplaces, where we started with Instacart, successful with DoorDash and now we added also Uber Eats. The beauty of those 3 marketplace partners with whom we are very happy in the way we communicate, and they are very happy with our $60 billion food sales on the East Coast and strong #1 and #2 positions is that they have different customer journeys and serve different customer attributes and different customer needs. So there's quite a high level of complementarity. The other good thing is that through those partners, we also get new customers. And that is also a great thing and will also contribute to the sales growth numbers. And if you look at those sales growth numbers and you compare us with quite some other players in our market, we also gain online sales there -- online sales share there with most of them. So this is a little bit more color on the online, what's going on in the U.S.

And then your question on the margin, why we reiterate our guidance was over delivering in Q1. I hope that you would be very pleased with us reiterating our guidance, but let's dive a little bit deeper. There are some one-offs impacting Q1 that will phase out as we referred to. And we also alluded on the phasing of price investments that will have an impact on the quarterly margins going forward. And last but not least, although the direct impact of the Middle East conflict are limited, there are still -- because we're largely hedged on, for example, diesel and energy, there are still some impacts that we need to mitigate and that has been taken on in this guidance. And also the SNAP impact on sales that we alluded to that although the sales impact, we have disclosed the number, there is also an impact, of course, of that sales not flowing through to our margin. So it's, as always, many levers to look at. We are confident that we can deliver on the plans that we disclosed and on the results that we included in our guidance, even with the slightly increased risk profile that is related to the Middle East and SNAP.

That's very clear. Just if you could follow up on the first question on online sales. Could you help us understand the shape of growth you expect for the year because Uber is pretty new. So does it help to have to maintain this circa 14%, 15% growth over the next quarters?

There's an item with high interest, I understand that, but we don't guide on full year online sales shares and also not this over the quarters. We're very happy with online double digit this quarter, and we think that online is a substantial part of our proposition in an omnichannel world and it depends also on customer demand. And it is, of course, also different brand by brand and region by region and higher and lower penetrated brands so far.

And it has our utmost focus. So we are focusing on it as it is part of that growth engine that we're feeding.

And it's getting more profitable at the same time. We have total allocated profitability, but the probability is growing.

The next question comes from Maxime Stranart from ING Bank.

Just one question on my side, if I may. Looking at working capital in Q1, obviously, quite a sizable outflow, especially related to payables, if I'm not mistaken. So I understand that part of this is due to timing and the timing of Easter, especially. But could you maybe a bit quantify what was actually the impact of that earlier -- that later Easter this year? That would be very helpful.

Well, thank you for the question. And indeed, has, of course, all our attention. We're very working capital focused. You are right, the working capital created that negative free cash flow impact in the first quarter and was mainly related indeed to payables. And also for the rest in the call, our payable position trends around EUR 9 billion. So a few percent of deviation in timing already has quite an impact. We're used to managing that over time and the deviation that you've seen in Q1 was mainly related to the outperformance of last year at the end of the year, and then you take that onwards in the first quarter. And this is as much detail that I could share. I think what helps is the reiterating of our guidance also on free cash flow. So we do expect that to phase out going forward.

Congrats again to Frans for his retirement.

We will now take our final question for today. Your final question comes from the line of Matthew Clements from Barclays.

Frans, congratulations. First question on inflationary pressure for this year. In your results, you talk about differences in your position in recent history. But perhaps you could just talk generally about what you're seeing in supply chain, how that compares to '22, '23 and how you think about some of these pressures working their way through supply chain through this year? And the second question would be on quick commerce. We're seeing some of your peers, particularly in the U.K. talking about rapid growth in quick commerce. How are you positioned in that channel? What's the scale? What's the profitability profile at the moment? And how do you think about things like retail media and data ownership in that context?

Thank you and thanks for the good wishes a year out. But...

I keep [indiscernible], you have to work for the next 12 months.

That's what I intend to there. I'm fully energized by that for sure. So forward-looking inflation, that's more or less what you asked. I understood your question. We have economists working on all these kind of topics and follow commodity prices and follow energy prices and follow packaging prices and these kind of things. If we then look a little bit at the Middle East, then the conflict there could give all reasons to believe that energy prices are going up. But as Jolanda already mentioned, for 2026, we are largely hedged both for electricity and diesel in both the U.S. and in Europe. But if you look at raw materials and commodities, if they go up, then we know that these kind of things always come in when they come with a sort of delay. And we have to manage this. It's not unusual these kind of situations. We have seen more delays. A couple of quarters years ago, we talked about cocoa and coffee and all these kind of things. So we know how that works. And therefore, also the relationship and the understanding with our vendors is important here that we make sure that with our shoot cost models, that we negotiate these kind of things that we bring this down to what is real and what is transparent and that we fight for our customers to make sure that we can avoid as much as we can food inflation because that is part of our mission. So let's see how that goes. Energy, Middle East, raw materials, commodities, of course, I'm concerned that this might cause food inflation, but we work to the max to do the best with our cost saving cost for our save our customer programs, the EUR 1.25 billion every year in our plants. And this is not completely new. This is not a completely new phenomenon in general. So this is a little bit what I see. For the moment, we do not see big upticks in inflation, but there's quite some uncertainty in markets, and we have to deal with this.

And then, Matthew, your second question on quick commerce. We are closely monitoring the fast delivery market. And we, for example, conducted pilots in the Netherlands in a few stores. But in the Netherlands, we see that this market is not yet very large. And the disadvantage of this market is that the demand for fast delivery is largely concentrated in those areas where the floor pressure in our stores is already high. So we will continue to monitor and conduct tests where necessary. And if we see that our customers are seeking for that quick delivery in those areas, we will respond to that accordingly.

So everybody, thank you for joining our call today. For those on the line, you didn't have an issue. For those on the webcast, apologies for that, and we will have it fixed on the replay later this morning.

What was exactly the fix? To be very clear, JP. We -- the text is available. The recording will be available.

Exactly.

The PowerPoints are available for everybody who can review later on. Is that the fix?

That's correct.

All right. Just to make sure that everybody has full access to our comments and data. Okay. Thank you very much.

And we'll see you guys on the road and many more road shows, Frans.

I will.

Thank you for joining.

We see a few people tomorrow in London as usual. Take care. Bye-bye.