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Edited Transcript of AD.AS earnings conference call or presentation 6-Nov-19 8:00am GMT

Q3 2019 Koninklijke Ahold Delhaize NV Earnings Call

Amsterdam Nov 9, 2019 (Thomson StreetEvents) -- Edited Transcript of Koninklijke Ahold Delhaize NV earnings conference call or presentation Wednesday, November 6, 2019 at 8:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Alvin Caezar Concepcion

Koninklijke Ahold Delhaize N.V. - VP & Head of IR

* Frans W. H. Muller

Koninklijke Ahold Delhaize N.V. - President, CEO & Chairman of Management Board

* Jeffrey Carr

Koninklijke Ahold Delhaize N.V. - CFO & Member of Management Board

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Conference Call Participants

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* Alan Vandenberghe

KBC Securities NV, Research Division - Head of Research & Equity Analyst of Food Retail

* Borja Olcese

JP Morgan Chase & Co, Research Division - Analyst

* Bruno Monteyne

Sanford C. Bernstein & Co., LLC., Research Division - Senior Analyst

* Cedric Lecasble

MainFirst Bank AG, Research Division - Research Analyst

* Fabienne Caron

Kepler Cheuvreux, Research Division - Head of Food Retail Sector

* James Robert Anstead

Barclays Bank PLC, Research Division - Director

* James Robert Grzinic

Jefferies LLC, Research Division - Equity Analyst

* Judah C. Frommer

Crédit Suisse AG, Research Division - Senior Analyst

* Nick Coulter

Citigroup Inc, Research Division - Director

* Robert Joyce

Goldman Sachs Group Inc., Research Division - Equity Analyst

* Robert Jan Vos

ABN AMRO Bank N.V., Research Division - Analyst

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Presentation

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Operator [1]

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Good morning, and welcome to the Analyst Conference Call on the Third Quarter 2019 Results of Ahold Delhaize. Please note that this call is being webcast and recorded.

Please note that in today's call, forward-looking statements may be made. All statements other than statements of historical facts may be forward-looking statements. Such statements may involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those included in the statements. Such risks and uncertainties are discussed in the interim report third quarter 2019 and also in Ahold Delhaize's public filings and other disclosures. Ahold Delhaize disclosures are available on aholddelhaize.com.

Forward-looking statements reflect the current views of Ahold Delhaize's management and assumptions based on information currently available to Ahold Delhaize's management. Forward-looking statements speak only as of the day they are made, and Ahold Delhaize does not assume any obligation to update such statements except as required by law. 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 over the call to Alvin Concepcion, Vice President, Head of Investor Relations. Please go ahead, sir.

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Alvin Caezar Concepcion, Koninklijke Ahold Delhaize N.V. - VP & Head of IR [2]

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Thank you, operator, and good morning, everyone. Welcome to our third quarter 2019 results conference call. On today's call are Frans Muller, our CEO; and Jeff Carr, our CFO. After a brief presentation, we will open the call for questions. And 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, aholddelhaize.com. (Operator Instructions)

I'll now turn the call over to Frans.

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Frans W. H. Muller, Koninklijke Ahold Delhaize N.V. - President, CEO & Chairman of Management Board [3]

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Thank you very much, Alvin, and good morning, everyone. I'm pleased with the strong third quarter results. Sales grew 2.9% at constant rates and global net consumer online sales were up nearly 30% at constant rates. And in the U.S., online sales growth accelerated to 26% in the quarter. So we're well on our way to reach our target of EUR 7 billion in global sales online by 2021.

Underlying EPS grew 5.2% or 2.3% at constant rates. Our U.S. business showed good performance with 1.8% comp sales growth, and excluding hurricane impacts from this year and last year, it was up approximately 2%. This was strong in light of the challenging prior year comparisons.

We saw particularly strong sales performance at Food Lion and Hannaford, and Stop & Shop was operating in a challenging sales environment even with the strike behind us. But we are encouraged by the improving transactions as we move into the fourth quarter.

Further, the Re-imagine Stop & Shop program is off to a good start. We were pleased with the uplift seen in the remodeled stores in Long Island, and it's performing within our expectations. The remodeled Hartford stores also are showing improved performance as they continue to perform -- to outperform comp store sales in the control group.

The Netherlands posted 3% comp sales growth and our market share improved to flat year-over-year at Albert Heijn in the quarter, which is an improvement over the declines seen in the previous quarters. Net consumer online sales for The Netherlands were also very strong, up nearly 31%. And within that, bol.com net consumer online sales grew 34%.

While long-term items benefited underlying operating margins in The Netherlands, this benefit was largely offset at the group level by an unfavorable swing year-over-year from insurance results, and Jeff will provide more details on that shortly.

Belgium showed an improving trend over the last quarter, excluding a calendar benefit, and we also gained share -- market share year-over-year in the quarter there.

Before I move over to Central and Southeastern Europe, I'd like to take a moment on behalf of our associates to offer our deepest condolences to the families and the communities affected by a road incident in Romania. On October 5, 10 people lost their lives, each of which were our colleagues, and 7 more were injured. The emotional impact is still felt far and wide, and we have seen solidarity from the teams as well as the companies and partners who reacted with empathy and showed a desire to help.

Now on to Central and Southeastern Europe. We saw strong performance in the Czech Republic and Romania, and we saw sequential improvements in both Greece and Serbia versus previous quarters. Our Save For Our Customers program is running ahead of schedule, and we now expect to save EUR 600 million in 2019, which is higher than our initial targets of EUR 540 million. Outside of the raised expectation for Save For Our Customers this year, we reiterate our 2019 outlook provided last quarter.

Let me know hand over to Jeff.

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Jeffrey Carr, Koninklijke Ahold Delhaize N.V. - CFO & Member of Management Board [4]

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Good morning, ladies and gentlemen. Thank you, Frans. Net sales for the quarter was EUR 16.7 billion, that's up 5.8% versus the prior year and obviously helped by the strength of the U.S. dollar. At constant rates, sales were up at 2.9% due to the continued success of our omnichannel approach with net consumer sales, as Frans mentioned, up 29.5% in the quarter. Underlying operating income at EUR 724 million was up EUR 26 million versus last year. Margins at 4.3% was strong, slightly down 10 basis points versus last year. Operating income was EUR 679 million in the quarter after EUR 45 million of impairment and restructuring charges mainly related to store impairments across the group.

So moving on to the performance by segment. In the U.S., net sales were EUR 10.3 billion, up 2% at constant rates. Comparable sales ex gas grew 1.8% during the quarter. And while Hurricane Dorian added a benefit of 30 basis points in the quarter, this was more than offset by the impact of Florence last year, given a kind of weather-adjusted comparable sales of just over 2%.

The performance in the U.S., as Frans mentioned, was very strong across most of our brands, especially at Food Lion, where we continue to see good volume growth and market share gains, and that was somewhat offset by Stop & Shop, as Frans mentioned.

Underlying operating margins were strong at 4.4% in the U.S., slightly down versus last year, and that's specifically due to the lower sales impact at Stop & Shop. Across the other brands, margins was stable or slightly up versus last year.

In The Netherlands, net sales grew 4.4% to EUR 3.6 billion and comparable sales grew by 3%. Albert Heijn continues to benefit from the remodeling program and remains on track to convert 120 stores to the new fresh format by the end of 2019. Net consumer online sales in The Netherlands, as Frans mentioned, grew 30.7% and bol was up by 34% in the quarter. Operating margins in The Netherlands were 5.6%, up by 30 basis points versus last year, again, largely due to the one-off adjustment of cost estimates from the balance sheet related to Albert Heijn.

In Belgium, the overall market remains sluggish, and our comparable sales were up 2%. Adjusted for the fact there were more trading days in the quarter compared to last year, sales were actually down, adjusted 0.6%, which, although it's disappointing, actually represented a market share gain for the Delhaize brand in the quarter. Underlying margins were down last year 2.8%, partly due to the start-up of our new mechanized warehouse facility. However, for the year-to-date, margins are flat at 2.7% compared to last year.

In Central and Southeastern Europe, we saw strong growth with total sales up 6.4% at constant rates and comparable sales up 4.5%. In the Czech Republic, sales growth was strong with volume growth in both the supermarket channel and our compact hypers. And then Romania comparable sales growth remains strong at Mega Image while our convenience brand, Shop & Go, had double-digit comparable sales growth.

In Greece, sales trends continue to show some improvement, and profitability remains robust. While in Serbia, we saw positive sales performance in our Maxi supermarkets. Underlying operating margins in CSE were up 30 basis points, which reflects the strongest sales leverage in the region.

Now moving on to free cash flow. I'm pleased we delivered free cash flow of EUR 484 million in the quarter, and that's in line with last year despite additional capital investments in the quarter of EUR 125 million. The year-to-date free cash flow is EUR 835 million, lower than last year. That's largely due to the Stop & Shop step-up in our investments in capital within our brands. Capital expenditure of EUR 1.6 billion year-to-date is up EUR 479 million versus last year. Additionally, taxes are ahead of last year by EUR 200 million -- around EUR 200 million, partly due to phasing, and working capital is around EUR 200 million down versus last year. The robustness of our free cash flow is demonstrated by our strong operating cash flow, which, at EUR 4 billion, is EUR 220 million ahead of last year on a year-to-date basis, and I remain confident we'll achieve our targeted free cash flow for the full year of EUR 1.8 billion.

So in summary, I can reiterate our guidance for the year. We expect underlying operating margins for the group to be slightly lower in 2019 than 2018 and underlying earnings per share to grow by low single digits. Additionally, we now expect our Save For Our Customer program to deliver EUR 600 million, up from EUR 540 million previously guided. And the incremental savings, as Frans mentioned, will be reinvested in our brands and our customer proposition to ensure we maintain competitive market positions and best-in-class omnichannel offerings in all of our key brands.

So thank you. Now I'll hand back to Frans.

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Frans W. H. Muller, Koninklijke Ahold Delhaize N.V. - President, CEO & Chairman of Management Board [5]

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Thank you very much, Jeff. I would like to take you to Slide #10 where we show ways of how we continue to make progress on the execution of our Leading Together strategy. The strategy revolves around helping our customers make healthier choices; providing innovative solutions to make shopping more convenient; understand consuming; and investing our network to drive growth, both in stores and online.

In the U.S., we reached our full year goal to reach 600 Click and Collect locations already in October, which was ahead of schedule. The new Click and Collect locations opened over the course of the year helped us to accelerate U.S. online growth to 26% this quarter. This gives us confidence, and we'll be able to exceed the 20% U.S. online sales growth for the full year.

Food Lion reported 28 consecutive quarter of positive comparable sales growth, clearly demonstrating ongoing momentum with the successful Easy, Fresh and Affordable program, which was rolled out to another 115 stores in the quarter. At the end of 2019, Food Lion will have completed remodels of 830 stores or 80% of the network. Our Re-imagine Stop & Shop program is off to a good start with the 21 remodeled stores in Long Island showing sales uplifts within our expectations. The 21 stores in Hartford, which were earlier remodeled, are outperforming comp stores and continue to improve.

At Stop & Shop, Giant/Martin's and Giant Heirloom, we also plan to roll out frictionless checkout to 30 stores by the end of the year. Customers can scan products with either their mobile or handheld scanner that we provide and can then simply exit the store bypassing the checkout.

We also began ramping up the Fresh Kitchen and culinary innovation center in Rhode Island in October. It will begin to develop distinctive, new, own-brand meal solutions. The facility will also help shorten the supply chain and present our customers a differentiating range in the various Fresh departments.

Moving to Europe on Slide 11. We continue to see strong sales growth in Central and Southeastern Europe supported by 148 net new store openings as well as strong 4.5% comp sales growth. bol.com continues to grow strongly, and importantly, its third-party sales grew 60% year-to-date with now over 19,000 merchants using the platform.

At Albert Heijn, we continue to convert stores to a new fresh and technology-focused concept. The 96th store was converted in the quarter, and we should have 120 stores completed by the end of the year, with more planned for next year.

We also continued to invest in AI by entering a partnership with other large B2C companies in The Netherlands to promote AI talent and technology. And in October, we opened an AI Retail Lab or what we call AIRLab in Delft in The Netherlands. The facility is an expansion of the AIRLab opened already in Amsterdam in April 2018.

And on November 12, Albert Heijn will be opening its fifth home delivery fulfillment center, or Home Shop Center we call it. The facility is 20,000 square meters in size and has the capacity to fulfill 40,000 orders per week in the Amsterdam area.

So let me wrap up. Our third quarter sales results were strong, particularly in the mature markets of the U.S. where we posted 2% comp sales excluding hurricanes and Netherlands where we post 3% comp sales growth. Central and Southeastern Europe grew strongly with 4.5% comp sales growth. Global net consumer online sales were up nearly 30% in constant currency, and the U.S. online sales growth meaningfully accelerated to 26% in the third quarter, driven by investments we've made in e-commerce and digital over the past year.

The Re-imagine Stop & Shop program is off to a good start, particularly in Long Island where it's performing as expected. The remodeled stores in Hartford are also improving. Our Save For Our Customers program is progressing ahead of schedule, allowing us to raise our goal to EUR 600 million in savings for 2019. Overall, we think the third quarter results and outlook reflects our confidence in our Leading Together strategy and the strength of our great local brands.

Now we can move over to the Q&A. And as Alvin said, it will be great when you could limit to 2 questions each.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from Mr. Judah Frommer of Crédit Suisse.

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Judah C. Frommer, Crédit Suisse AG, Research Division - Senior Analyst [2]

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First, I was hoping you could help us with just some incremental color on the strength of Food Lion and then the challenges at Stop & Shop. Is that driven by competition? Are you still seeing lackluster trend outside of the strike activity at Stop & Shop? And then more specifically, you did mention, I believe, last quarter some price investment dollars that were not allocated during the Stop & Shop strike. So what are the latest thoughts on allocating those into the back half of the year?

And then secondarily, any comments on fee compression in home delivery? Walmart and Amazon have made announcements, I believe, since your last earnings release. So thoughts on just how fees are going to affect the Peapod business and home delivery versus Click and Collect for you, guys.

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Frans W. H. Muller, Koninklijke Ahold Delhaize N.V. - President, CEO & Chairman of Management Board [3]

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Thank you, Judah, and thanks for being so early with us early in the morning. As Jeff already mentioned, overall, we gained market share as a company on the East Coast in the U.S., and especially Food Lion and Hannaford had a very strong quarter. Stop & Shop is back to its prestrike levels, and we also see, in the fourth quarter, improving customer counts.

Having said that, a strong online sales proposition in the U.S. growing 26% in the quarter where, of course, all the brands benefited from. And for Stop & Shop, yes, it remains competitive on the East Coast, and that is not different than prestrike. So we invest in our brands with our Re-imagine Stop & Shop program, and we see very encouraging results both in Long Island and in Hartford, Connecticut. And the program, as you know, started recently, and we will, cycle-by-cycle, further invest in the brand both in remodeled, fresh and center store departments as well as in price. Anything else from your side, Jeff, to add to this?

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Jeffrey Carr, Koninklijke Ahold Delhaize N.V. - CFO & Member of Management Board [4]

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No. I'd say, overall, the competitive situation hasn't really changed significantly down the East Coast. I think we continue to see, obviously, Walmart in the south of our markets being competitive on price. But Food Lion continues to benefit from the Easy, Fresh, Affordable program. And we had significant remodelings over the last quarter, and that resulted as we continue to see strong performance in the market and strong sales across all of our Food Lion regions. But Stop & Shop is clearly a key area of focus. We're not happy with the trends. It's not really a competitive issue so much in the New England market. There's a lot of self-help that we can do. And with the Re-imagine Stop & Shop program, we're confident we'll continue to see improvements.

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Judah C. Frommer, Crédit Suisse AG, Research Division - Senior Analyst [5]

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Okay. And just the price investment allocation?

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Frans W. H. Muller, Koninklijke Ahold Delhaize N.V. - President, CEO & Chairman of Management Board [6]

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On the loan.

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Jeffrey Carr, Koninklijke Ahold Delhaize N.V. - CFO & Member of Management Board [7]

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Yes. I would say, so far, our fees for delivery haven't really been affected, and we do have a small fee for Click and Collect. Obviously, there's not a lot of overlap with Kroger in our own markets. So we continue to see a small charge for Click and Collect. I think it's in a low single-dollar region, less than $5, usually.

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Frans W. H. Muller, Koninklijke Ahold Delhaize N.V. - President, CEO & Chairman of Management Board [8]

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I think also, Judah, it's -- there's a lot of emphasis on fee structures, but an online proposition is much more than fees. It's also assortments. It's also quality. It's surface -- service orientation of drivers and store people. It's a fresh component where we have very big shares of fresh, how we handle the fresh foods. So the total online proposition is much more than fees, and we grew 26% in this quarter. So we must have done quite a number of things, right?

And on pricing and price comparison -- price competition, we have a very strict pricing policy and pricing strategy. And we're very consistent in this, in the way we price ourselves. We always report out of this, and we feel well priced. And as Jeff already said, our Re-imagine Stop & Shop program has also a price effect. That's why we look forward to a good development in the fourth quarter.

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Operator [9]

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Our next question is from Mr. Bruno Monteyne, Bernstein.

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Bruno Monteyne, Sanford C. Bernstein & Co., LLC., Research Division - Senior Analyst [10]

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The first question is on the one-offs in the Dutch margin, Jeff. I'm a bit confused by it because, on the hand, you're stripping out some restructuring charges, the negative ones, and you keep in the positive. Could you just clarify a bit more what exactly these one-offs is and the reasoning why those should stay in?

And the second one is coming back to the U.S. growth question from just before. As you've commented in the past about market share, are you still having stable or growing market share in all the banners? And if you do strip out Stop & Shop, do you still have positive volume like-for-like in those banners?

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Frans W. H. Muller, Koninklijke Ahold Delhaize N.V. - President, CEO & Chairman of Management Board [11]

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Yes. Let me start with the easiest question, which is the second one. Bruno, we see positive sales growth with the comp sales at 1.8% or corrected for weather year-on-year, 2% growth. And apart from Stop & Shop, and I think it's clear where we are there, we gained market share in all the other brands and we gained also market share based on volume. In the Northeast, the CPI is roughly at the 0%, looking at these kind of inflation numbers. So we gained market share. We gained volumes. And therefore, very happy with those results. And overall, in the total East Coast, we gained share as well. And in many cases, that is based on like-for-like growth because we do not add a lot of footprint. And also Food Lion company, with quite some competition adding new stores, is gaining confidently market share in their markets.

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Bruno Monteyne, Sanford C. Bernstein & Co., LLC., Research Division - Senior Analyst [12]

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And Stop & Shop is holding flat in markets. So would it be fair enough in that market? Or is it declining your market shares Stop & Shop?

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Frans W. H. Muller, Koninklijke Ahold Delhaize N.V. - President, CEO & Chairman of Management Board [13]

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No. It's been going down, but that was, of course, partly strike-related. And also, getting into the strike, as you know, we were not happy with the trends. So that's why we started Re-imagine Stop & Shop with remodeling in the stores, also investing in price. That's what we said in November 2018. And therefore, we are, at the same time, also encouraged by the results we see in Long Island and in Hartford where we further fine-tuned those remodels and those investments. We see very strong pickup in everything, what has to do with the fresh parameter. We also now touch base on the center store departments where we see also very encouraging results as well. And at the same time, Stop & Shop, in an omnichannel fashion, of course, is also benefiting from the 26% online sales growth in the quarter.

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Jeffrey Carr, Koninklijke Ahold Delhaize N.V. - CFO & Member of Management Board [14]

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Bruno, coming back to your question about The Netherlands. First of all, let me just say we have very clear definitions of what goes below the line. Whether it's store impairments or impairments generally, gains and losses on the sale of assets and restructuring charges, they go below the line. That's not to say above the line, we might not have some unusual items from time to time, and this was some general balance sheet adjustments in the normal course of business. So they're not unusual in their nature, but they were large enough to impact the margins. So we felt, from a transparency perspective, it's best to break it out and be clear around EUR 20 million of adjustments. So that came through from normal balance sheet adjustments. Reassessment of our provisioning position led to around about a 40, 50 basis points improvement in margin in the quarter. Now that's -- those aren't, by their nature, unusual in the type of transactions. And therefore, we don't put them below the line. From time to time, that happens. And when it does happen, it might have a positive or a negative impact on our underlying numbers. We'll call them out from a transparency perspective. So I think that's pretty clear policy.

And relative to The Netherlands, that means if you excluded those items and those -- by all means do, you'd see margin slightly down quarter-on-quarter. I expect The Netherlands performance has been pretty strong in the third quarter. And I see Albert Heijn trending towards a strong performance in quarter 4. So it's -- I'm quite comfortable with the performance of The Netherlands in an absolute basis.

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Frans W. H. Muller, Koninklijke Ahold Delhaize N.V. - President, CEO & Chairman of Management Board [15]

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In case of information, Jeff, in the numbers, what we have also in the third quarter a flat market share for Albert Heijn year-on-year as well. So also there we see an improving trend.

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Bruno Monteyne, Sanford C. Bernstein & Co., LLC., Research Division - Senior Analyst [16]

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As I understand, it's more provisions-related, balance sheet adjustments, so not dissimilar to an insurance provision adjustment. They're quite similar in nature, would that be fair enough?

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Jeffrey Carr, Koninklijke Ahold Delhaize N.V. - CFO & Member of Management Board [17]

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Yes. That's fair enough. And we draw attention to the EUR 15 million delta in terms of the insurance charges that go through the P&L. Again, we don't pull that out. It's all within the underlying number. And again, because this was a relatively large adjustment, but it's in the normal course of business, we felt, from a transparency perspective we ought to refer to it.

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Operator [18]

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The next question is from Mr. Nick Coulter, Citi.

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Nick Coulter, Citigroup Inc, Research Division - Director [19]

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Two for me, please. Firstly, can I ask about the 21 remodels on Long Island and encouraging sales lift -- uplift. Are those expectations the same as the CMD or have the shape of the economics evolved in regard to volumes, margin mix or cost ratios? And are you trending in the right direction to meet your hurdle rates for returns?

And then secondly, you seem to have settled on a model in The Netherlands with your -- I think now your fifth Home Shop Center. But could you update on the various trials in the U.S. and if you are closer to settling a fulfillment model, given you have different facilities and different approaches in New Jersey, Lancaster and Windsor, to name a few?

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Frans W. H. Muller, Koninklijke Ahold Delhaize N.V. - President, CEO & Chairman of Management Board [20]

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Sounds like a buy one, get 4 free -- 1 for free question. Only 2 questions, Nick. But...

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Nick Coulter, Citigroup Inc, Research Division - Director [21]

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I'll rejoin the queue as well, Frans.

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Frans W. H. Muller, Koninklijke Ahold Delhaize N.V. - President, CEO & Chairman of Management Board [22]

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Yes. On the Long Island situation, 21 stores trending very well, in line with expectations. That's also on growth. That's also on the investments. That's also in line with expectation on the hurdle rates. So the answer on that question is yes, in line with the CMD numbers we gave you in those days with Connecticut, and we're very happy with that Long Island development.

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Nick Coulter, Citigroup Inc, Research Division - Director [23]

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So that gives you a lot of confidence for the future with that remodeling program? Do you think now you got a formula?

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Frans W. H. Muller, Koninklijke Ahold Delhaize N.V. - President, CEO & Chairman of Management Board [24]

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It does, but cycle we learn. And also Food Lion was not working from the very beginning. So we learn -- cycle on cycle, we learn. And also here, we learn from Connecticut what's working in fresh, what's not working in fresh, to what customers appreciate, where can we even scrutinize investments and costs. And we also found out in Connecticut, there was quite some work to do on center stores still. So we did a few things already there and we did more on Long Island, and we see the customers appreciate this and that we pick up sales there. So we are happy, therefore, with the learnings, and we keep on learning. So after 40 stores, I mean it's not done yet. So I think we're very proactive, and we collect a lot of data there.

And on the Home Shop Center Amsterdam, that's a fifth one for the country, by the way. 20,000 square meters in the Amsterdam area, and it will give us more firepower on the sales and capacity point of view. That's also needed because we also there, we grow more than 20% in the Dutch market with the ah.nl label. So that's just supporting our growth.

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Jeffrey Carr, Koninklijke Ahold Delhaize N.V. - CFO & Member of Management Board [25]

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Yes. I mean we don't give out the capital investment in that center, but it's pretty small. When you look at it, it's limited mechanization. There is some, but it's limited mechanization. But overall, we're pretty happy with the efficiency we get out of that center. I think, Nick, you also asked about the U.S.

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Nick Coulter, Citigroup Inc, Research Division - Director [26]

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Yes. It's more on the U.S.

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Jeffrey Carr, Koninklijke Ahold Delhaize N.V. - CFO & Member of Management Board [27]

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Yes. I think in the U.S., we will continue to have different models. I think we have, as you mentioned, 3 (inaudible) semi-automated facilities in New Jersey, in Chicago with their largest semi-automated facilities. And we have a mix of that and dark stores, which are smaller facilities. I don't know how many exactly there is, but something in the mid-20s. And we're replacing the dark stores or supplementing those, obviously, with the micro fulfillment.

Now we haven't announced an expansion of that. We're still running that and getting that to the optimum in terms of efficiency. It doesn't constrain our capacity because, as you can see, we're growing -- we talked about 26%. But going into the fourth quarter, we'll clearly be heading towards the 30%. So we're not seeing any capacity constraints because of the fact that we haven't rolled out more of those micro fulfillment centers.

But we need to be convinced that we can achieve the labor efficiency before we press the button on the improved -- in the rollout of those centers. So we'll continue to run a hybrid of some larger centers and the smaller dark stores, and we'll continue to take mechanization one step at a time as we see a good return on the investment.

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Operator [28]

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The next question is from Mr. James Anstead, Barclays.

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James Robert Anstead, Barclays Bank PLC, Research Division - Director [29]

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I've got 2 questions, please. So the first one would be about the free cash flow target. I hear Jeff's confidence about being able to hit the EUR 1.8 billion, but it does look like there's still quite a big hill to climb in the fourth quarter. I just wondered if there's anything you particularly call out as being likely tailwind in the final quarter of the year, whether it's lower cash taxes or stronger working capital.

And then the second question. I think last year, at the Capital Markets Day and the year before that in the third quarter results, you use that opportunity to talk about share buyback for the following year. I don't think there's anything scheduled between now and hopefully, the fourth quarter's trading statement in January, and I don't see anything about the share buyback. So I just wondered if we should draw any conclusion from that at all.

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Jeffrey Carr, Koninklijke Ahold Delhaize N.V. - CFO & Member of Management Board [30]

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Okay. Let me cover the free cash flow first. There's still quite a -- as you said, quite a significant quarter to come, but it's not out of step with last year or the year before in terms of the ratios. And if you go down and look at the year to go and the balance to go, operating cash, as I mentioned in my script, stays strong. Working capital improvements in the fourth quarter is normally when we have a strong quarter. And compared to last year, it wouldn't have to be -- it's not going to be particularly different from what we achieved last year.

There will be less income tax paid because of the phasing of the income tax in the fourth quarter compared to last year. And our CapEx will be down a little bit on last year. So the combination of those gets you to the number slightly ahead of last year and able to achieve the EUR 1.8 billion. So it's not a dramatic change in terms of what we have to deliver, but working capital in line with last year. Investments slightly down on last year, and the strong operating cash flow will deliver the numbers.

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Frans W. H. Muller, Koninklijke Ahold Delhaize N.V. - President, CEO & Chairman of Management Board [31]

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The buyback.

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Jeffrey Carr, Koninklijke Ahold Delhaize N.V. - CFO & Member of Management Board [32]

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On the buyback, yes, we didn't -- we have not -- we had the Capital Markets Day after the third quarter announcements last year, and we took that opportunity to announce the buyback. I wouldn't read anything into that at all. Our strategy, our policy remains consistent. And we're still 2 months to go really before the end of the year with well over EUR 100 million still left on the current program. So I wouldn't read anything into that whatsoever in terms of our intentions.

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Operator [33]

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The next question is from Mr. Robert Jan Vos, ABN AMRO.

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Robert Jan Vos, ABN AMRO Bank N.V., Research Division - Analyst [34]

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I have 2 as well. You explained the quarter impact of -- or you explained what the quarterly underlying operating margin. Belgium was down. But more structurally, you see that the segment is still trailing performance of the other segments. What can and will you do to drive the profitability in Belgium a bit higher? Just my first question.

And my second question, yes, the adjustments for impairments and restructuring expenses was quite material in the quarter of EUR 45 million. Going forward, is there any kind of normalized level that you anticipate per annum or per quarter? Anything to comment on that? Of course, the EUR 45 million was quite a bit more than I'd expected. Maybe you can give some color there.

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Frans W. H. Muller, Koninklijke Ahold Delhaize N.V. - President, CEO & Chairman of Management Board [35]

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Robert Jan, let's start with the Belgian market. As we said before and also last quarter, the Belgian market is a difficult market from an economy point of view, but we're doing very well. We have 3 branches operating there, Albert Heijn, bol.com and our leading brand, Delhaize. And all 3 are growing, and all 3 are gaining market share. And as Jeff already mentioned, even with the corrections year-on-year for Delhaize, we gained market share with Albert Heijn, and we gained market share with bol.com.

So the second thing is that if you look at the operating margin then compared to last year, yes, it's down. But if you look at the trend quarter-on-quarter, we're going up. We have a positive trend towards our profitability in Belgium. And at the same time, we made already quite some investments in infrastructure in DCs and in online where we got the benefit further from. So we feel very confident that we will grow our shares in Belgium also going forward, and that we also, for Delhaize, will have further improvement of our underlying operating margin.

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Jeffrey Carr, Koninklijke Ahold Delhaize N.V. - CFO & Member of Management Board [36]

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Yes. In terms of the EUR 45 million, it is higher than normal, and I would not expect -- I can't give you a normalized run rate. But I'd say that was a high number, and I wouldn't expect that level on a regular or ongoing basis. We have over -- around 7,000 stores, nearly EUR 20 billion of fixed assets. And from time to time, as we go through the normal process of testing impairment or actually, in this particular case, we had a results of a full asset count in the Czech Republic, which resulted in a small write-down, around EUR 16 million of that EUR 45 million was related to that.

And then, therefore, generated a higher-than-normal number. I'd say we have a very good process of cycle counts through a EUR 20 billion fixed assets that we maintain, that register in good shape. But from time to time, those counts throw up something, which we have to adjust, and that's what we saw in the Czech Republic. And that resulted in a charge higher than we normally see. And I wouldn't -- I can't give you normalized number, but I wouldn't expect to see that level of charge going through on a normal quarter.

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Operator [37]

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The next question is from Mr. Rob Joyce, Goldman Sachs.

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Robert Joyce, Goldman Sachs Group Inc., Research Division - Equity Analyst [38]

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Two for me as well. So the first one, just on the U.S. online. I think you touched on it, but could you just let us know what the average delivery fee you're charging is now or collecting now and also the average pickup fee and an idea of average basket sizes in the U.S. for the online business?

And then the second one, just wondering if you could give us an update on the ongoing contract negotiations regarding Giant, with particular reference to the range of outcomes potentially on the multi-employer pension, which I believe is expected to go insolvent in the fourth quarter of 2020.

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Frans W. H. Muller, Koninklijke Ahold Delhaize N.V. - President, CEO & Chairman of Management Board [39]

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Yes. We operate, as Jeff already mentioned earlier, different models in the U.S., and we are very happy that they can offer those different options to our customers. So those are coming from a home delivery model where we have been and are still the leader of the East Coast. We also added up our pickup facilities started with Hannaford. And in the meantime, we have more than 600 Click and Collect locations.

Apart from the way of fulfillment, we also offer next-day, same-day and immediate, and most of it is our proprietary operation with our people, our software and our customer connect, which is strategically the right thing to do. And at the same time, we test the number of things with a few third-party partners as well to learn from this and to see how we can reach even more customers. So we made a big stride forward. The 26% is already proof of this with our online sales but also, at the same time, offering more options.

In all the markets, we look at competition, we look at the type of service. And therefore, we don't have standardized fees in the marketplace. We have very local fees, depending on the type of service competition and the region where we operate. And I said earlier, fees is not the decisive element for customers, we believe, in an online proposition. It's more about assortment and convenience and fresh and quality and price and also partly fees. So I think the whole fee discussion is rather overstated. People order groceries and fresh groceries with us, which is different than ordering a television or a book that has also more quality aspects. So that's on the online proposition.

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Robert Joyce, Goldman Sachs Group Inc., Research Division - Equity Analyst [40]

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And just average basket sizes, sorry?

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Jeffrey Carr, Koninklijke Ahold Delhaize N.V. - CFO & Member of Management Board [41]

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I think on Click and Collect, it's probably just over $100, in the region of $110, something like that. On home delivery, it's a bit higher. I think it's more like $120, $130. That's in the U.S.

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Frans W. H. Muller, Koninklijke Ahold Delhaize N.V. - President, CEO & Chairman of Management Board [42]

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It might differ for brands slightly.

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Jeffrey Carr, Koninklijke Ahold Delhaize N.V. - CFO & Member of Management Board [43]

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Yes, slightly different per brand. Food Lion, probably lower on average. But I think that's evidence that the omnichannel customer will get a large share of the wallet from an omni. Obviously, those baskets are much higher than our store baskets on average.

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Frans W. H. Muller, Koninklijke Ahold Delhaize N.V. - President, CEO & Chairman of Management Board [44]

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Yes, and that's the game. So online baskets are, in all the brands, higher than our normal brick-and-mortar baskets. We see more loyalty from customers, and we see that also the share of wallet is increasing.

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Jeffrey Carr, Koninklijke Ahold Delhaize N.V. - CFO & Member of Management Board [45]

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I think on the fees, Frans, it's quite -- I mean it's in the low dollars, single dollars for Click and Collect. On home delivery, it's, I think, on average, in the high single dollars. Gets up to $10. It's not usually more than that. Though we do some testing of time of the day in terms of can we yield, manage the fees. So obviously, a Monday morning or a Friday night when I'm busy, we yield manage that in some locations, which gives us -- encourages people to use the midweek slots, which generally don't get used. So it can vary because of that. And I think quite often, it's free on those slots that are available.

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Frans W. H. Muller, Koninklijke Ahold Delhaize N.V. - President, CEO & Chairman of Management Board [46]

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Yes. But also, we have to put it in perspective. I mean if you pay $4 for a Click and Collect and the service is lousy, then no fees don't help. So in the end, people will look at what do I get for this in value and in quality. And people are not so -- on the long term, not so sensitive to a low dollar amount fee.

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Jeffrey Carr, Koninklijke Ahold Delhaize N.V. - CFO & Member of Management Board [47]

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So on the Giant, all I'd say is that the discussions are ongoing. I mean that's -- we're pleased with the way those discussions are going. We've agreed extension with the union. And obviously, the FELRA pension is a key part of the collective bargaining discussion, and that's all linked together. And those discussions are ongoing. And as soon as we have a resolution, obviously, we'll be making announcements.

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Frans W. H. Muller, Koninklijke Ahold Delhaize N.V. - President, CEO & Chairman of Management Board [48]

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Those are constructive dialogues at this moment.

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Operator [49]

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The next question is from Mr. Borja Olcese, JPMorgan.

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Borja Olcese, JP Morgan Chase & Co, Research Division - Analyst [50]

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On U.S. margins, these were quite resilient more than I would have thought. So I'm just trying to put my head around drivers there. I'm curious as to gross margin trends, hurricane impact benefit or headwind, any potential PPA benefit as well or synergies. You didn't disclose the synergies. So I wonder if this were higher than the same quarter last year. If you could comment on those drivers, that would be very helpful.

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Jeffrey Carr, Koninklijke Ahold Delhaize N.V. - CFO & Member of Management Board [51]

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Yes. Let me comment on that. I think, first of all, in the U.S., I mentioned specifically that outside of Stop & Shop, the margins were flat or slightly positive. Stop & Shop was slightly down, primarily due to the deleverage and the fact that we're not growing. And clearly, growth in grocery is the key element in terms of delivery on margin. So we're very pleased with the overall margin trends. The commercial environment hasn't significantly changed. And the way that we saw a step-up in pricing in 2017, for example, as Walmart was reacting to Lidl and we were all reacting to that, we haven't seen that type of pricing environment. We increased our Save For Our Customer expectations in the year to $600 million. Those are real dollars that come in, and we're able to apply that to our initiative such as e-commerce, price investments, quality investments, and that helps deliver a resilient -- and a strong Save for Our Customer program helps deliver a resilient margin performance.

And additionally, I just said that both hurricane effects were relatively neutral on margin. It didn't -- Dorian didn't have a significant benefit on margin. So all in all, it's -- of course, it's what we do. It's a big challenge. But I'd say the U.S. margins were resilient through the quarter as they have been over the last several years. But it takes a lot of work on Save For Our Customer. Obviously, top line growth is very important, and we're seeing strong growth in areas like Food Lion and Hannaford, which obviously is the best solution in terms of delivering strong margins and a strong cost program.

And those add up to a good position in the U.S. with some margin decline due to Stop & Shop, which isn't commercial -- isn't commercially driven or competitively driven. It's really more driven through our own need to get volume growing and improve the customer proposition on that brand, which we're working on. It's not purely going to be driven by the reimagine program in terms of the restructuring. There's a lot we can do in addition to that in terms of improving the commercial attractiveness and the proposition. So I think, yes, it was -- overall, it was a good performance in the U.S.

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Frans W. H. Muller, Koninklijke Ahold Delhaize N.V. - President, CEO & Chairman of Management Board [52]

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And when we talk about margins, we have always been very clear in the previous quarters. We will not allow that brands get off their pricing strategy to improve margins. So we also are very loyal to our existing pricing strategies, which we defined for a longer time. And all our brands are on pricing strategy and priced right. For Stop & Shop, we made some earlier remarks and test further to get them priced right. And another thing, on top what Jeff mentioned, we also see now our private label department, which we completely in-sourced 2 years ago. We see also that they come to work for us in more differentiating assortment with -- in the end, also a stronger price margin component as well.

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Operator [53]

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The next question is from Mr. Cedric Lecasble, MainFirst.

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Cedric Lecasble, MainFirst Bank AG, Research Division - Research Analyst [54]

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Cedric Lecasble from MainFirst. Most of my questions have been answered, I have one remaining. Could you maybe give us some color on how your rollout of services of Click and Collect have picked up so far in the U.S. lead you to be -- maybe reconsidering timing capital intensity? Could you recap maybe the total rollout effort, how long and how much? What should we see as capital expenditure in the coming years if you have already some ideas?

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Frans W. H. Muller, Koninklijke Ahold Delhaize N.V. - President, CEO & Chairman of Management Board [55]

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Yes. If we talk about the Click and Collect rollout, $600 million already in October, ahead of plan. We make smaller adjustments in stores to make that happen, so it depends a little bit on the formats, and those are smaller capital adjustments. The second thing is that we think that we can further grow with Click and Collect to make sure that we cover the whole network, and that the whole network soon will have access to -- and delivery and Click and Collect and same day and instant. And that's what we will reach a bit coverage already in next year.

And the other thing is that if we look at the total online sales and the distribution of a Click and Collect versus home delivery -- and also Click and Collect, of course, if it's growing faster, it will also have a positive economical effect on our bottom line results for online. If you don't have to -- if customers are very happy, we can make them very happy with a good Click and Collect service and not performing -- bringing for them the expensive last mile. So we will see also there a positive margin mix effect of growing with Click and Collect. And so far, customers are very happy and adopting that extension of our coverage in a good way.

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Jeffrey Carr, Koninklijke Ahold Delhaize N.V. - CFO & Member of Management Board [56]

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On capital, well, let me just say, in terms of capital, I'd say in the U.S., Click and -- e-commerce continues to be relatively capital light depending on your fulfillment solution, but it tends to be relatively capital light. This year, we're probably spending on our e-commerce from a capital perspective in the region of $200 million, which may be a little higher than that. But that's servicing something that's $200 million to $300 million this year, but we're rolling out 600 Click and Collect points.

And going forward, I imagine we'll be at a lower capital rate in the U.S. We get -- we'll increase the number of Click and Collects next year. We don't see the need to have Click and Collect at every store. I think one store can sometimes serve a larger catchment area. And our investment in fulfillment, again, is relatively light as we currently adopt more of a semi-automated as opposed to fully automated solution.

So I think the capital investment is relatively modest compared to the EUR 2 billion per annum that we're investing as a group in total capital. And it's still a much lower capital solution than our stores, which obviously are pretty capital intensive.

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Frans W. H. Muller, Koninklijke Ahold Delhaize N.V. - President, CEO & Chairman of Management Board [57]

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Which is supporting our omnichannel strategy. We have 2,000 location on the East Coast with the top-class locations and very dense, then extending this Click and Collect service can be pretty capital light and also using your locations in a very smart way.

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Cedric Lecasble, MainFirst Bank AG, Research Division - Research Analyst [58]

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So could you please remind me the share of delivery in the -- in Click and Collect so far?

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Jeffrey Carr, Koninklijke Ahold Delhaize N.V. - CFO & Member of Management Board [59]

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I'd say delivery is still probably 80%, but the share of Click and Collect is growing quickly as we open up the new Click and Collect points. So it's probably still around 80-20, but I imagine it's -- that ratio is going to move with more Click and Collect. And I think the U.S. customer is -- we see different levels of penetration on the Click and Collect, by the way. In some areas, as low as 2%; some areas, up to 10%; in terms of the store, the sales going through Click and Collect. So different penetration levels in different geographies. I imagine Click and Collect will be faster-moving over the next couple of years. And I think as we see most of our competitors, Walmart and Kroger, also with a strong program of rolling out Click and Collect, the Click and Collect model in the U.S. with an omnichannel offering seems to be one of the winning formulas.

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Operator [60]

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The next question is from Mr. Alan Vandenberghe, KBC Securities.

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Alan Vandenberghe, KBC Securities NV, Research Division - Head of Research & Equity Analyst of Food Retail [61]

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I have 2 left. The first one is regarding Amazon, and it appears that Amazon will be expanding its offering via its amazon.nl website. And I was wondering if you could share your views on that one. And then the second one is maybe I missed the answer, but if you could provide a bit more color on what exactly you mean by higher logistical expenses in Belgium.

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Frans W. H. Muller, Koninklijke Ahold Delhaize N.V. - President, CEO & Chairman of Management Board [62]

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If you look to amazon.nl, Amazon is already, for a longer time, in the Dutch and Belgian market or through their German or through their French operation. So this is not a surprise, this is not new. And if you look at our sales numbers with more than 30% online growth in the Benelux, then we are concentrating on our own proposition to make it even better. With bol.com, we have a very good product. We're able to strengthen the platform, lots of Plaza partners, 19,000 of them. The Plaza platform is growing 60%. Our Plaza partners are very content with the way we operate because we have an excellent last-mile proposition next day and a very good reputation with customers. That's not only in Holland the case, but also in Belgium the case.

So in the second half -- in the first half of the next year, we also will roll out the French language module for Belgium as already previously announced. So then we also get more strength in the Belgium market. In the Belgium market, we also opened a commercial office to give also Belgium partners and Belgian traders, the access to our bol.com platform. So it will be more and more an omnichannel ecosystem type of service. With bol, we also connected with a few of our other brands. It was Atos brands or [Holland Ahold] brand. We use our Delhaize store network in Belgium for pickup locations for the bol packages. So we get more into an omnichannel platform type of solution for the Benelux, and we are very confident in looking at the growth we produce that we have the right strategy here.

And amazon.nl, we don't underestimate any competition, but that is not new. They're already in the market. The fulfillment will come from Germany as far as we understood from (inaudible) and from Amazon France from the northern part of France. So it's also not a big change, it's up to us to make sure that we are delighting customers, and it's up to customers to decide what is the best proposition for them.

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Jeffrey Carr, Koninklijke Ahold Delhaize N.V. - CFO & Member of Management Board [63]

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I think in terms of Belgium, yes, we did talk a little bit about the high logistic costs being driven by the start-up cost of a new automated warehouse in Belgium. That is up and running, but we've incurred more start-up costs in that process than we expected. That's a temporary timing issue. That will continue to ramp up during the course of the fourth quarter and into next year, and I'm sure we'll end up delivering a good service. But in the short term, that's -- we've incurred some additional onetime type of costs in terms of that mechanized warehouse in Belgium.

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Operator [64]

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The next question is from Ms. Fabienne Caron, Kepler.

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Fabienne Caron, Kepler Cheuvreux, Research Division - Head of Food Retail Sector [65]

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Two questions for me. First on Food Lion. I remember in the past, Food Lion was always positioned as a kind of top-up banner where customers didn't tend to do their full shopping. So I'm wondering, can you help us in this strong like-for-like? Is it more traffic or basket-sized driven?

And the second question is Hannaford. Why is Hannaford performing so well in the northeast of the U.S. compared to the other Ahold banner?

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Frans W. H. Muller, Koninklijke Ahold Delhaize N.V. - President, CEO & Chairman of Management Board [66]

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Fabienne, you have been in Hannaford stores, it's just a great store to be. And the guys there kept on investing in the fresh proposition, in private label, in the Click and Collect solution, great staff, very engaged associates, good locations and a very strong brand for years and years and very well-invested brand. So that's why we are very proud of our Hannaford. We are proud about all our 19 brands, but Hannaford is growing quite nicely.

On Food Lion, also, there we have some history here because it was not easy 6 years ago when we started with the program, Easy, Fresh and Affordable. At the same time, at the moment, we grow end count, customer count, and we grow basket. But we came from afar, and I think we are very happy with the development we see. We gained, with all our brands in the U.S., market share when the only brand where we did not gain share was with Stop & Shop. So also very happy with the Giant Food development, very happy with the Giant/Martin's development where, together, we now benefit from our, let's say, commoditized, centralized services with Retail Business Services, RBS. So private label and supply chain, very efficiently but also very well done. We benefit with our people, digital apps overall organization, servicing all our brands with e-commerce, innovation, digital and this type of elements.

So I think the structure we put in place at the beginning of 2018 with PDL and with RBS is surfacing all the brands, is benefiting the brands. We learn from each other. We learn -- at Hannaford, we learn from Giant/Martin's. And at Stop & Shop, we might learn from Food Lion in a number of areas. And I think that's the strength of the great local brands in the U.S. with a mandate for the brands to run their own front-end, run their own category, their own pricing and their own marketing, be connected to the communities for decades and be even stronger there and a community partner. And at the same time, on the back-end, on the community side, noncustomer-facing. We try to find the efficiencies, but also the innovation and get the best resources, leveraging new services for those brands. And that's why Hannaford no different there for Giant/Martin's or for Stop & Shop. We learn from each other. And yes, those are great brands, but we have 19 great brands in our network.

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Jeffrey Carr, Koninklijke Ahold Delhaize N.V. - CFO & Member of Management Board [67]

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And then let me just add on Stop & Shop, Fabienne. We have 440 great locations for Stop & Shop. It's the market leader with good profitability and a high sales density. The sales per square meter is high relative to other brands in other businesses in the marketplace. So whilst it's not growing and there's a real need to introduce a new fresh format, which we've introduced into Long Island, I think we have to keep in perspective that it's a strong market-leading brand with good sales densities, and what's most important, the best locations in the Northeast.

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Operator [68]

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The next question is from Mr. James Grzinic, Jefferies.

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James Robert Grzinic, Jefferies LLC, Research Division - Equity Analyst [69]

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Yes. I just had a quick one. Can you perhaps update us on King Kullen and more generally, how that experience informs your thinking on M&A in the U.S., both infill and large scale?

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Frans W. H. Muller, Koninklijke Ahold Delhaize N.V. - President, CEO & Chairman of Management Board [70]

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Yes. James, we announced King Kullen. In King Kullen, we have not that much more to report apart from the fact that we're going in the right direction, but it's under FTC approval. And we're very happy with the opportunity to grow our footprint further in Long Island, and we just have to wait for the approval. But it will come now in foreseeable time.

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Jeffrey Carr, Koninklijke Ahold Delhaize N.V. - CFO & Member of Management Board [71]

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I think the key difference there, James, is we're buying a business. It got FTC review, which we didn't really expect, to be honest, because of the size of the deal. But because of the sensitivity of the market shares on Long Island, they decided to review it. A lot of the deals that we've done over the last 2 years have been just asset deals where we bought individual stores. They don't come under the FTC review process. So we still see -- it doesn't change our philosophy of seeing real opportunities on filling in our markets by consolidating down the East Coast. That still is a very attractive option for us, and we're confident we'll get King Kullen across the line in due course.

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Frans W. H. Muller, Koninklijke Ahold Delhaize N.V. - President, CEO & Chairman of Management Board [72]

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And there are a number of -- and then, James, we have a number of targets where we are -- we have our eyes wide open. So on an M&A front, I think we are very well organized both in Europe and in U.S. Those markets will further consolidate, and so we're very open within the bandwidth of where we'd like to be as an omnichannel supermarket player, within the bandwidth of our prudent investments, hurdle rates and these type of things. We see consolidation happening on the East Coast.

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James Robert Grzinic, Jefferies LLC, Research Division - Equity Analyst [73]

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So just to confirm, you don't feel that with infill. I mean the FTC is starting to be really quite hardnosed on that, that you might need to go a little bit more contiguous relative to infill or M&A?

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Frans W. H. Muller, Koninklijke Ahold Delhaize N.V. - President, CEO & Chairman of Management Board [74]

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That assumption, we do not support. But as Jeff mentioned, it surprise us a little bit for the size of the company, King Kullen, that it took so -- that it take so long. But there's no drawback whatsoever against -- if the target is right like King Kullen, if the network is appreciating this, then we have to be a little bit more patient apparently.

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Jeffrey Carr, Koninklijke Ahold Delhaize N.V. - CFO & Member of Management Board [75]

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We are already in this strong position. And we had a strong position on Long Island, and obviously, this strengthens our position. So I can understand why the FTC wanted to have a full review.

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Alvin Caezar Concepcion, Koninklijke Ahold Delhaize N.V. - VP & Head of IR [76]

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Great, everyone. Thanks. This concludes our conference call and webcast. Thank you for joining, and have a nice day. Take care.