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Delhaize to continue Food Lion investments following strong Q4

Delhaize to continue Food Lion investments following strong Q4

Delhaize Group on Thursday said sales and underlying profits in the U.S. increased in the fiscal fourth quarter, citing effects of comparable-store sales growth, a favorable sales mix and better sales leverage.

Sales for the quarter totaled $4.7 billion, a 12.1% increase. Excluding the effect of a 53rd week in the 2014 year, sales improved by 3.8% and comparable-store sales totaled 3.6%, supported by retail inflation of 2.6%.

Underlying operating profit increased by 44.1% to $199 million (€157 million). Underlying operating margin for the quarter was 4.2% compared with  3.3% in 2013. Excluding the 53rd trading week, underlying operating profit increased 20.7% to $166 million. Underlying operating margin increased from 3.3% to 3.8% mainly due to a higher gross margin helped by a favorable sales mix as well as due to lower selling, general and administrative expenses as a percentage of revenues.

Frans Muller, CEO of Delhaize, said the chain would roll out its “Easy Fresh and Affordable” strategy at 160 more Food Lion stores in 2015, saying the program -- with price and service elements designed to increase basket sizes -- has driven positive results at 76 stores to have already received the investments. The strategy requires an investment in $1.5 million in each store.


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“We believe this will favorably position us in an increasingly competitive Southeastern U.S. market,” Muller said in a statement. “While we are focused on maintaining our sales momentum, we are also mindful of non-recurring costs related to Food Lion´s strategic initiative.”

In 2014, U.S. operations generated revenues of $17.7 billion, an increase of 6.6% -- 4.5% excluding the effect of the extra week. Comparable store sales growth was 4.4%. The U.S. gross margin decreased by 22 basis points to 25.9% mainly as a result of cycling price investments at Food Lion.

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