Ahold Delhaize NV (ADRNY) shares rose to a three-month high in Amsterdam trading Wednesday after the Food Lion and Stop & Shop owner posted stronger-than-expected third quarter earnings and grew its U.S. sales despite intense competition from discount retailers and Amazon's (AMZN - Get Report) move into food delivery.
Ahold Delhaize, which also owns Giant supermarkets and its the largest owner of brick-and-mortar food retailers in the eastern United States, said net income for the three months ending in September rose 54% on a pro-forma basis to €362 billion ($385.3 billion). Group sales slowed on a reporting currency basis, owing to a stronger euro during the three month period, to €15.1 billion, a figure that fell largely in-line with analysts' estimates.
"We reported a strong financial performance again this quarter as margins increased significantly, driven by synergies while savings from our "save for our customers" programs are continuously being reinvested in the business," said CEO Dick Boer. "In the United States, inflation returned at low levels, and sales performance further improved. We gained market share across our brands in a competitive landscape with new entrants."
Amazon's $13.7 billion acquisition of Whole Foods Markets (WFM) , which closed at the end of August, as well as the expansion of German-based discounters Aldi and Lidil, has ignited some of the biggest changes in the $800 billion U.S. food retail in a generation.
Kroger Co. (KR - Get Report) , Ahold Delhaize's biggest rival, has lost around 38% of its market value so far this year, thanks in part to Amazon's encroachment but also because of falling food prices and intense competition from new discount entrants.
Ahold, however, said its U.S. sales grew 0.8% to $6.4 billion at Giant and Stop & Shop while Food Lion and Hannaford sales rose 2.2% to $4.4 billion. Margins at both sets also improved, the company said, thanks to accelerated cost cuts, which its expects to rise to a higher-than-expected €250 billion by the end of the year.
The group also said that Peapod, its online offering that competes directly with Amazon, was growing its customer base and performing well.
"Peapod continues to invest in marketing its "Podpass" membership that offers free delivery at a fixed fee, resulting in more members with high renewal rates," the company said. "Podpass members order more frequently and spend more in total than other customers."
Ahold Delhaize shares were marked 5% higher at €17 each in Amsterdam, the highest since early August, but are still some 15% down on a year-to-date basis.
More of What's Trending on TheStreet: