CHARLOTTE, N.C. -- Delhaize Group, Brussels, said last week it expects to realize operating efficiencies of $70 million annually as a result of the simplified corporate structure the company's U.S. shareholders approved in April.
At a meeting with equity analysts here, Pierre-Olivier Beckers, chief executive officer, said, "Through the creation of one unified capital structure, we have the right vehicle in place, giving us a lot of leverage."
Also at the meeting, Rick Anicetti, executive vice president and chief operating officer for Delhaize's largest U.S. operating company, Food Lion, Salisbury, N.C., told analysts Food Lion is optimistic it will continue to grow and increase profits during the next 24 months.
Until April, Delhaize Group and Delhaize America, Salisbury, N.C., had separate stock offerings; since April, the company has a single offering, with Delhaize Group ordinary shares traded on the Euronext Brussels exchange and Delhaize Group American Depositary Shares traded on the New York Stock Exchange.
In addition to Food Lion, Delhaize America operates Hannaford Bros., Scarborough, Maine, and Kash 'n Karry, Tampa, Fla.
Beckers explained that the new structure will remain on local marketing. "The local approach is paramount. It is the best way to build sales. We are dedicated to differences," he said.
Specific growth initiatives for the company include the addition of 200 stores annually, including 25 stores this year in Asia. In the United States, it will roll out self-checkout to boost sales.
The initiatives are expected to produce a 20-cent increase in earnings per share, according to Beckers.
However, Beckers noted that the company has no major acquisitions planned in the next two years, and will not enter any new markets.
Anicetti said Food Lion will add 250 stores in the next five years, and perform 120 remodels and 47 expansions annually.
"Remodeling and expanding our store base is an important ingredient for continued growth," he said.
Anicetti also noted that the company is implementing zone pricing to make it more competitive, a tactic it learned from Hannaford. "No longer will all stores from Florida to Pennsylvania be priced the same," he said.
Food Lion is also shifting its merchandising focus to a fresh format. "Where we once were very focused on center store," he said, "we have shifted our attention across the store, and are focusing on fresh, and have realigned our merchandising staff accordingly. "Also, we have always catered to our Hispanic and African-American customers, and the recent migration of those ethnic groups to our operating areas will provide for a substantial increase in sales," Anicetti said.
Anicetti also noted that the operator feels its loyalty card program has helped retain and add primary customers. Food Lion is using the card for a variety of marketing programs, he added.
"There is no question our card has enhanced our low-price position," Anicetti said.
In response to a question about whether Wal-Mart Stores has been an obstacle to sales growth, Anicetti said Food Lion stores that compete directly against Wal-Mart Supercenters have experienced 19% sales growth over several years.
