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Food Lion Investments Pressure Delhaize’s Profits

BRUSSELS — Price and service investments at the Food Lion banner continued to pressure profits for Delhaize Group 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

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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