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Delhaize Sees Profit Gains in U.S.

BRUSSELS — Delhaize Group here said Wednesday that underlying operating profit in the U.S. improved in the first quarter, buoyed by stronger sales from continuing operations.

Underlying U.S. operating profit rose 14.1%, to $197 million, in the first quarter, compared with year-ago results. Underlying operating margins were 4.2% of sales in the U.S., vs. 3.7% last year.

Pierre-Olivier Beckers
Pierre-Olivier Beckers

“This was boosted by favorable weather conditions, cost savings, lower losses at Bottom Dollar Food and the benefit from closing under performing stores,” said Pierre-Olivier Beckers, president and chief executive officer, Delhaize Group, in a conference call with investors. Beckers also announced on Wednesday his plans to retire by the end of this year.

The company said it has invested more than 80 basis points in lower prices in the U.S., although that investment was “mitigated by improved supplier terms.” In addition, selling, general and administrative expenses, or SG&A, decreased by nearly 70 basis points as a percent of sales over year-ago levels, to 21.5%.

At Food Lion, the company plans to “go live” with phase four of its repositioning effort next week in the Baltimore and Washington markets. That will bring to 78% of the Food Lion network having been repositioned.

“We are confident that we will see there similar results as in earlier phases,” Beckers said.


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He also said a fresh round of price investments had begun at Hannaford Bros., and noted that the company had succeeded in improving profitability at Bottom Dollar, the company’s price-impact format. It has not opened any new Bottom Dollar stores in the past nine months, although it said more openings are planned for the Philadelphia and Pittsburgh markets.

As previously reported, revenues in the U.S. were up 1% in the first quarter. Excluding revenues from the 126 stores closed in February 2012 and 45 stores closed in February 2013, U.S.revenues increased by 3.7%. Comparable-store sales were up 3%, including a positive calendar effect of 1.1%.

Read more: Delhaize Comps, Profits Rise in Q1

The company said its repositioned Food Lion stores outperformed expectations, and Hannaford Bros also “showed an improved sales performance.”

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