BRUSSELS — Improved sales at repositioned Food Lion stores helped Delhaize Group post increases in sales and earnings in the second quarter, the retailer here said Thursday.
In the U.S., sales improved by 0.4% to $4.25 billion, and comparable-store sales improved by 1.1%. Sales figures do not include results of Sweetbay, Harveys and Reid’s stores, given their planned divesture. Sales improved as a result of higher volumes at Food Lion and Hannaford, driven by price investments at both banners.
Underlying margins improved from 3.7% in last year’s second quarter to 3.8%, and underlying profits in the U.S. were up by 4.9% to $162 million.
The results prompted Delhaize to raise its underlying profit guidance slightly to at least 780 million Euros (around $1 billion).
Margins improved as a result of improved sales leverage and buying, reduced shrink, and lower expenses, the company said. The company also reduced its losses from its Bottom Dollar discount chain.
Read more: Beckers' Delhaize a Work in Progress
Food Lion intends to complete its repositioning initiative during the fourth quarter, Pierre-Olivier Beckers, Delhaize’s chief executive officer, said. That initiative — consisting of price and service investments at around 875 stores, or 80% of the Food Lion fleet — has resulted in three straight quarters of improved revenues, officials said.
Beckers said the company was now looking at the “next step” in Food Lion’s evolution, which he described as “further accentuating the differentiation versus our competition, making Food Lion a true convenient neighborhood supermarket.”
Delhaize intends to open 10 Bottom Dollar discount stores in the second half of the year, officials said. That chain is making “significant progress” on cost and productivity initiatives and is continuing to gain new shoppers, but the division is still not profitable.
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