Stop & Shop’s Strike Impacts Operating Profit Estimates of $110 Million
QUINCY, MA - The 11-day strike with Ahold Delhaize’s Stop & Shop has finally come to an end. The strike affected 246 out of its 415 stores and started on April 11, 2019. The company announced a tentative agreement of terms with five local unions, which allowed Stop & Shop’s 31,000 associates in New England to return on Monday to work.
Stop & Shop estimates a one-off impact on underlying operating profit of between $90 million and $110 million as an outcome of the strikes, resulting from lower sales, increased shrink of seasonal and perishable inventory, and additional supply chain costs.
“I am pleased that Stop & Shop’s management and the five local unions have tentatively reached a fair and responsible contract in which all Stop & Shop associates are offered pay increases, eligible associates have continued excellent health coverage and eligible associates have ongoing defined benefit pension benefits,” said Frans Muller, CEO of Ahold Delhaize. “I know that both Stop & Shop management and its associates are proud to welcome customers back and look forward to taking care of them every day.”
According to the company’s press release, Ahold Delhaize now anticipates underlying operating margin for the group for 2019 to be slightly lower than 2018 as a consequence of the strikes. Additionally, the percentage growth of underlying earnings per share in 2019 is revised from high single digits to low single digits. The company expects group free cash flow to be unchanged at around €1.8bn (approximately $2 billion USD) due to the continued business strength of our other U.S. and European brands for the full year 2019.
Expected to be published on May 8, 2019, the first quarter 2019 financial results are unaffected and in line with expectations, as stated in the press release. More details will be provided on the impact of the strikes at Stop & Shop at that time.
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