Price investments and severe winter weather helped Delhaize’s U.S. stores post a 4.6% comparable-store sales increase in the first quarter, the retailer said Wednesday.
Overall U.S. revenues improved 4.1% to $4.4 billion. Underlying profits decreased by 8.2% to $155 million in the quarter, reflecting lower margins as a result of price investments at both the Hannaford and Food Lion banners, as well as costs involved with snow removal, officials said.
Frans Muller, Delhaize’s CEO, characterized competition as more intense in Hannaford’s New England territory, noting Market Basket’s implementation of a 4% discount on all purchases in addition to promotions. However, he said was also “carefully” watching Food Lion competitor Harris Teeter, anticipating that Kroger will invest some of its synergy savings from its acquisition of the banner into lower prices.
Muller said that 35 Food Lion stores would adopt a developing “easy, fresh and affordable” strategy this summer, with a goal to expand the program to 77 stores by year-end. This strategy, designed to increase sales density, focuses on assortment and private-label changes, employee training, a new pricing tool and service enhancements like increased speed at checkout.
The assortment changes — which include an 18% sku reduction affecting roughly 50% of Center Store assortments — is already under way, Muller said. The retailer is also reviewing assortment at Hannaford, but Muller said he expected there would be fewer changes to that brand’s selection.
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