Food Lion Expands Revamps

BRUSSELS — Delhaize Group [3] here last week said it planned to expand its Food Lion repositioning effort to about 250 stores in the Virginia markets of Norfolk, Richmond, Roanoke and Lynchburg.

As previously reported, the company hopes to roll out the makeovers — which include reduced pricing and other changes — to a total of 800 to 900 Food Lion locations by year-end, after earlier revamps in the Raleigh, N.C., market have driven sales gains.

“The solid trends in both customer count and number of items purchased in the Food Lion ‘phase one’ stores in the Raleigh market continued in the fourth quarter and early this year,” said Pierre-Olivier Beckers [4], president and chief executive officer, Delhaize Group, in a conference call discussing fourth-quarter results. “These stores had clearly benefited from the price investments made since they were launched in early May 2011 and from the other attributes of the Food Lion brand which we are strengthening in all of these stores.”

He also said the company’s 14 Bottom Dollar Food stores opened earlier this year in the Pittsburgh market have “clearly exceeded expectations.” Sales volumes at Bottom Dollar Food stores in the Philadelphia market have also picked up, he said.

In January Delhaize said it would shutter 113 Food Lion stores and eliminate its Bloom banner as part of a broader reorganization that will eliminate about 5,000 jobs.

Delhaize last week said operating profit in the U.S. fell 20.3% in the fourth quarter, to $243 million, and was down 9.5% for the year, to $921 million.

Gross margins were down 60 basis points in 2011, to 4.8% of sales. The company attributed the declines to “soft sales and price investments” in the competitive and economically challenged Southeast.

As previously reported, sales in the U.S. rose 1% in the fourth quarter, to $4.77 billion, and 2.2% for the fiscal year, to $19.23 billion. U.S. comp-store sales were down 0.4% in Q4.