Food Lion Investments Pressure Delhaize’s Profits

BRUSSELS — Price and service investments at the Food Lion [2] banner continued to pressure profits for Delhaize Group [3] during the fiscal second quarter, the retailer here said Wednesday.

Overall U.S. sales decreased by 3.1% to $4.7 billion, although sales were up by 0.3% excluding the 126 Food Lion stores closed in February. Comparable-store sales decreased by 0.6%. Operating profits were down by 24.5%, and operating margin as a percent of sales decreased a full percent to 3.3% of sales, as a result of continued price investments and brand repositioning at Food Lion.

Officials in a conference call said the 166 Food Lion stores included in the first phase of its brand repositioning last year showed 3.2% comparable-store sales growth in the quarter, helped by a 2.7% increase in transaction counts. Phase two stores, launched this spring, showed similar trends. Delhaize launched phase three in July and plans a fourth phase early next year.

Officials said Bottom Dollar helped improve overall volume trends but that the discount division was still a money loser.

Read more: Bottom Dollar Food Expands in Pittsburgh [4]

Including operations in Europe and Asia, Delhaize posted sales of $7.1 billion (U.S.), an increase of 11.5%, while operating profits dipped 12% to $229.3 million.

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