Message from our CEO

Dear shareholder,

It is a pleasure to write to you for the first time as the new CEO of Ahold.

The past year was another challenging one for the food retail industry worldwide and I am particularly happy that we were able to once again deliver a solid performance in our businesses in both Europe and the United States. We succeeded in driving volumes and growing market share in almost all of our markets.

In 2010, our sales grew 5.7 percent and we achieved an underlying retail operating margin of 4.9 percent, in line with our mid-term target of five percent. As a result of our performance, I am pleased that we are able to propose a dividend of €0.29 per common share, a 26 percent increase compared to last year. We will also launch a new 18-month €1 billion share buyback program following the successful completion of our earlier €500 million share buyback program.

In the Netherlands, Albert Heijn continued to provide great value to customers, win new business, and increase its market share. Our XL store format was voted the best supermarket in the Netherlands for the second year in a row. Albert Heijn also rolled out a new assortment of affordable, everyday, non-food items and increased the number of products under its “AH puur&eerlijk” organic and sustainable own brand. Our drugstore chain, Etos, was named the most customer-friendly in the Netherlands, while our wine and liquor business, Gall & Gall, remodeled its 100th store into its new, modern, customer-friendly format.

In the Czech Republic, Albert continued to improve its profitability by attracting more customers with its new fresh assortment and extended opening hours, and by reducing costs and simplifying the business.

In the United States, we completed our reorganization of the businesses into four geographic divisions with one executive leadership team and support organization. We also completed the acquisition, integration, and rebranding of the Ukrop’s Super Markets chain in Richmond, Virginia, under our Martin’s banner. In addition, we acquired and remodeled five former Shaw’s supermarkets to our Stop & Shop banner, and acquired two Genuardi’s stores in the Giant Carlisle market area. We also successfully completed Project Refresh at Giant Landover, a three-year program that involved remodeling almost 100 of our stores. Peapod, our online grocery business, expanded into the Indianapolis, Manhattan, and southeastern Wisconsin markets, and continued to grow market share. It is now the largest internet grocer in the United States, serving 11 states and the District of Columbia.

We continued to focus on cost reduction across the business, and are ahead of our plan on the three-year €350 million program we started at the beginning of last year. Our ability to continuously take costs out of the business is essential, and was particularly important in 2010 with challenging markets and consumers focused on value and promotions. Despite these conditions, we continued to successfully balance sales and margins and provide great value to all our customers.

In 2010 we aligned our company values so that all of our businesses share a common definition and understanding of who we are, what’s important to us, and how we do things. This is the first time we have had a common set of values for all our employees. We also developed a new vision for the company that says we want to offer all of our stakeholders better choice, better value, better life, every day.

Over the course of the year there were a number of changes within our senior management team. After five years with Ahold, and more than three as CEO, John Rishton left the company at the end of February 2011 to become CEO of Rolls-Royce. John was instrumental in strengthening our company, restoring its credibility, and making employees proud to work at Ahold once again.

Larry Benjamin retired as our COO of Ahold USA at the end of January this year.
He joined the company in 2003 as the CEO of our former subsidiary, U.S. Foodservice, and oversaw its recovery and sale in 2007. Following this, he led the successful repositioning of our retail operations in the United States and was a member of the Corporate Executive Board since 2008.

On behalf of everyone at Ahold, I would like to thank John and Larry for their strong leadership and the tremendous contribution they made during their time with us.

In addition to these two Board changes, in September, we announced the appointment of Carl Schlicker as our new COO of Ahold USA and Sander van der Laan as our new COO for Ahold Europe, both reporting to me.

On a sad note, in January this year we said goodbye to Albert Heijn, the grandson of the founder of our company. His death marks the passing of the last member of the Heijn family to lead our company and the end of a remarkable chapter in food retail. During his lifetime, Albert changed the way people in the Netherlands ate and shopped and he took our company from an exclusively Dutch supermarket business to a major international food retailer. He grew the company from €18 million in annual sales when he started in 1949 to €8 billion when he retired forty years later. Albert’s entrepreneurial spirit and achievements will have a lasting impact – both in the Netherlands and around the world.

One of Albert’s priorities was to do the right thing for customers and others whose lives the business touched. I feel the same way and am particularly pleased with the progress we made in our key corporate responsibility priority areas – healthy living, sustainable trade, climate action, and community engagement – over the course of the year. We also made significant steps in defining how we carry out and measure our activities and in setting clear, measurable targets for all our corporate responsibility priorities between now and 2015. You can read more about our strategy and achievements in our 2010 Corporate Responsibility Report.

It is an exciting time for the food retail industry and for Ahold. Rapid changes in the way people shop and the ever-increasing demand for new products and services present great opportunities for retailers. In the year ahead, we will continue to broaden our offering by introducing new and innovative products and a greater range of services, to win the hearts of customers and satisfy more of their daily needs.

Everything we have achieved over the past year is thanks to the passion and commitment of the more than 210,000 employees in our stores, distribution centers, and offices on both sides of the Atlantic. I, along with my colleagues on the Corporate Executive Board, thank them for their dedication, hard work, and unrelenting focus on doing what is right for the customer. As we look to the coming year, I am confident that we will continue to delight and surprise those who shop with us, grow the business, and increase shareholder value.

Dick Boer

Chief Executive Officer

March 2, 2011

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