BRUSSELS — The stock of Delhaize Group  here fell more than 11% on Friday after the company reported weak U.S. sales at its Food Lion division in the second quarter.
The company, which also operates the Hannaford Bros. chain in the Northeast and the Sweetbay banner in Florida, said the weak economy continued to put pressure on consumer spending in the Southeast during the second quarter, and that the price reductions it rolled out earlier this year have not yet gained traction.
“In this difficult economic environment all our competitors are using aggressive high/low promotional tactics to buy traffic, and the price leader is also promoting aggressive rollbacks. This puts additional pressure on prices on top of the structural price reset we started at the beginning of the year at Food Lion,” said Pierre-Olivier Beckers, chief executive officer, Delhaize Group, in a conference call with analysts on Friday.
The company said comparable-store sales in the U.S. were down 3.6% in the second quarter, adjusted for the earlier Easter holiday this year.
Hannaford Bros. performed well, however, the company said. U.S. operating profits fell 18.8% in the quarter, to $211 million, while U.S. sales were down 2.8%, to $4.68 billion.
Through the first half, U.S. operating profit fell 12.8%, to $459 million, and sales were down 1.6%, to $9.35 billion. The company also trimmed its operating profit guidance for the year and cut capital expenditures, and added another 200 million euros (about $256 million U.S.) to its previously announced cost-cutting plan. Some sources of cost cutting include in-store efficiencies and coordinated procurement efforts.