Delhaize Initiates Cost-Cutting

Delhaize expects to see opportunities for margin improvement in the second half as it implements a 60 million euro ($93 million) cost-cutting initiative, the company said in a conference call yesterday discussing second-quarter earnings.

BRUSSELS — Delhaize expects to see opportunities for margin improvement in the second half as it implements a 60 million euro ($93 million) cost-cutting initiative, the company said in a conference call yesterday discussing second-quarter earnings. Last month the company had projected soft results for the quarter and revised its guidance downward for the second half, citing economic pressures on consumers. “In the U.S., the situation worsened progressively through the second quarter, [but] we see some encouraging signs that the worsening trends have somewhat lessened at the beginning of July,” said Pierre-Olivier Beckers, chief executive officer. The company said same-store sales in the U.S. rose 1.9% in the quarter at identical exchange rates. At both Food Lion and Hannaford, the number of transactions and of items purchased per visit decreased. At Sweetbay, the number of transactions increased, which the company attributed to price investments that began last year, while the number of items purchased per visit decreased, “as in the other U.S. operating companies, due to more prudent consumer behavior,” the company said. Private-label sales at Food Lion were up 12% in the quarter, the company said, which helped contribute to an increase in U.S. gross margins for the quarter.

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