Inside This Issue - News
Delhaize proceeds with Food Lion plan
September 3rd, 2012
BRUSSELS – The Delhaize Group reported lower second quarter profits as store closures and investments at Food Lion pressured sales and earnings.
Profit from continuing operations net of taxes fell 26% to 86 million euros ($107.7 million). Sales were 5.70 billion euros, an increase of 4.2% at constant exchange rates.
Sales in the United States fell 3.1% to $4.73 billion, reflecting the closure of 126 Food Lion locations in February. Excluding the impact of the store closures, revenues edged up 0.3%. Compounding that impact, though, was a 0.6% decrease in comparable-store sales.
Continued price investments and repositioning at Food Lion pushed U.S. operating profits down 28.2% to $147 million. However, executives expressed satisfaction with the result of the investments at Food Lion thus far.
Delhaize chief executive officer Pierre-Olivier Beckers noted that the first stores to be relaunched (Phase One stores) have shown strong revenue growth in the second year after repositioning, while the Phase Two stores, relaunched this March, are showing similar momentum. Phase Three stores were relaunched in July, bringing the total of repositioned stores to more than 700, or 65% of the Food Lion chain.
"The most encouraging part of our announcement is that Phase One continues to grow after it cycled its grand-opening date of a year ago in May," said Delhaize America chief executive officer Ron Hodge during a conference call with analysts. "So on one hand, we have Phase Two performing at the same type of levels and customer acceptance as Phase One did at that stage, and we have Phase One continuing to attract new customers, so we’re very encouraged about that.
"Even though we’ve got 700 stores that have been converted now with Phase Three, we still have more to go, and we’re very, very encouraged by the results."