The Maze: Ahold Delhaize, the Dutch supermarket group behind Albert Heijn and Food Lion, expects an October cyberattack to cut its fourth-quarter net sales by €200 million to €250 million. The company took some systems offline to protect them after detecting malicious activity. Stores stayed open, but the shutdown disrupted online shopping mainly in the US and the Benelux region of Europe. It also disrupted grocery distribution in the Benelux, which covers Belgium, the Netherlands and Luxembourg.
Source: Ahold Delhaize. The company's investor slide separates the estimated fourth-quarter sales and operating profit effects from the extra cost of responding to the incident.
The Details:
The group expects lower sales and lower profit. In its November 4 earnings release, Ahold Delhaize put the expected hit to fourth-quarter operating profit, the profit it makes from running the business, at €75 million to €100 million. That range applies to both its adjusted measure and the figure it reports under international accounting rules. The company separately expects the added cost of responding to the incident and repairing systems to have a small effect on reported operating profit for the full year. It gave group-wide estimates without breaking out how much of the impact came from individual brands, markets or channels.
A grocery website could reopen before deliveries resumed. In an October 19 update, the company said Dutch supermarket chain Albert Heijn had brought its website and app back online. At that point, the company expected home deliveries to resume on October 23. Online grocery services in Belgium had already returned, while the US brands were still working to restore theirs. Ahold Delhaize said most of the disruption was contained within two weeks, with work to fully restore operations continuing when it reported earnings. The company said its online marketplace bol was unaffected.
US online sales were growing fast before the disruption. In the third quarter, which ended before the attack, US online sales rose 14.2% from a year earlier after stripping out changes in currency exchange rates. It was the tenth straight quarter of double-digit US online growth. That gives a sense of the momentum in the channel Ahold Delhaize had to restore. The growth rate measures sales before the incident. The fourth-quarter estimate covers the subsequent disruption across the group.
MarketMaze Take: An online grocery service is back when a shopper can place an order and get the groceries. Albert Heijn's website and app returned ahead of the expected restart of deliveries, so looking only at whether the site was up would have missed a service customers were still waiting for. Open stores gave shoppers another way to buy, but the group's forecast shows management still expects the disruption to cost sales.
For a grocer planning for an outage, the Albert Heijn example suggests measuring recovery against the whole order. Can the customer find available stock, place the order and receive it as promised? Checking those steps by brand and market would show where service is still impaired, even after the main website returns. Ahold Delhaize's group forecast leaves open how much of the sales impact came from each point of failure.
