Delhaize Reports ‘Robust’ Q3

For its third quarter of 2015, international retail conglomerate Delhaize Group posted revenue gains of 14.5 percent and 2.3 percent, respectively, at actual and identical exchange rates. U.S. organic revenue growth was 2.3 percent, with revenue growth in local currency at 0.1 percent.

Same store sales rose in all of Delhaize's operating regions, including in its home market, where comp store sales trended positive for the first time after six consecutive quarters of negative performance.

In the U.S., Delhaize's ongoing investments in store operations and prices helped boost growth and build momentum. Further, while its U.S. Delhaize America division benefited from hurricane weather in September, its stronger performance was driven by the momentum of Food Lion's "Easy, Fresh & Affordable" campaign and investment in prices.  Hannaford also saw positive comps and volume growth.

Overall Q3 U.S. revenues edged up by 0.1 percent to $4.5 billion, aided by comparable-store sales growth of 1.7 percent, a negative calendar impact of 1.4 percent and the closing of some Food Lion Stores.

"We continue to report robust sales in this third quarter," affirmed Frans Muller, president and CEO of Brussels-based Delhaize Group, who added that its merger with Ahold is poised to be completed by mid-2016. "At Delhaize America, while our revenue growth was driven by Food Lion, Hannaford also posted positive volume growth once adjusted for the competitive turmoil of last summer. We made significant progress with our key strategic initiative Easy, Fresh & Affordable at Food Lion by further fine-tuning Wilmington and Greenville [N.C.], relaunching 162 stores in the Raleigh [N.C.] market two weeks ago and preparing for our next market in 2016."

For the first nine months of 2015, Delhaize’s revenues grew by 16.1 percent and 2.6 percent at actual and identical exchange rates, respectively, and organic revenue growth was 2.6 percent. U.S. revenue growth was 2.1 percent, and comps increased 2.2 percent. Delhaize’s gross margin for the first nine months of the year was 24.4 percent of revenues and was almost flat at identical exchange rates as price investments in the United States and Belgium were offset by improved procurement conditions in Belgium and southeastern Europe.

Additionally during the quarter, U.S. underlying operating profit fell 4.2 percent to $190 million, leading to an underlying operating margin of 4.2 percent, compared with 4.4 percent in the year-ago period. Delhaize said the decline was mainly because of higher SG&A expenses as a percentage of revenues due to the higher pre-opening costs at Food Lion’s 162 Easy, Fresh & Affordable stores in Raleigh, and investments in I.T. projects. U.S. gross margin for the quarter was flat, as price investments were offset by cost savings.

Added Muller: "We are looking forward to the important fourth quarter of the year, and we are confident that we will deliver results and free cash flow in line with expectations. At the same time, we continue to make progress with the proposed merger with Ahold and we are on track to complete the transaction by mid-2016."