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Delhaize Expects Strong 2008, Despite Weak Dollar

AMSTERDAM - Belgian supermarket group Delhaize blamed a weak dollar for a 3.7 percent drop in revenues for its 2007 fourth quarter, but said it still expects its U.S. business will ride out the current economic downturn.

"We are preparing for another strong year in 2008," said Pierre-Olivier Beckers, president and c.e.o. of Delhaize Group. "While the economy is far more uncertain than last year, it is also true that strong companies will be able to seize opportunities in such an environment. We are confident that Delhaize Group is well equipped in this regard."

The c.e.o. said it will reap the rewards of several existing initiatives in 2008, "including the Sweetbay transformation, the Guiding Stars nutritional navigation system, the segmentation work at Food Lion, the use of ACIS at Delhaize Belgium, price investments throughout the Group and the launch in the U.S. of the new private label brand for chilled prepared meals, 'On the Go Bistro.'"

Beckers also noted that the retailer will support its growth through a major step-up in its store opening plan, with a planned increase of approximately 150 stores, including an acceleration of store openings at Food Lion.

Delhaize fourth quarter sales were EUR 4.7 billion (U.S. $6.8 billion). At identical exchange rates, sales increased 5 percent over 2006. (According to Delhaize, the U.S. dollar weakened 11 percent against the Euro.) U.S. comparable store sales grew 3.7 percent for the quarter.

Delhaize sales for the year were also affected by the weakened dollar, reaching EUR 19.0 billion (U.S. $27.8 billion) compared to EUR 19.2 billion (U.S. $28.1 billion) in 2006, a decrease of 1.4 percent the company attributed exclusively to an 8.4 percent weakening of the U.S. dollar. Revenues grew by 4.9 percent at identical exchange rates.

Delhaize did, however see comparable store sales growth of 3.8 percent in the fiscal year for its U.S. operations, the strongest performance in more than a decade, according to Beckers.

"Fourth quarter revenues were supported by dynamic revenue growth at all three U.S. operating companies," said Beckers. "At Food Lion, the market renewal program continued to bear fruit. Hannaford further demonstrated best-in-class revenue growth, supported by its competitive pricing and innovative strategy. At Sweetbay, revenue growth of most stores continued to be strong."

Delhaize finished 2007 with 1,570 supermarkets in the U.S., which included 44 new stores and 11 store closings, and 12 relocations. The retailer also remodeled 159 supermarkets, including 81 Food Lion stores in the Norfolk, Virginia market, and 20 in the Myrtle Beach, South Carolina market.

Delhaize also converted 31 Food Lions and 30 Kash n' Karry stores to the Sweetbay Supermarket banner, resulting in a total of 106 Sweetbay stores at year-end. Bloom stores totaled 61 and there were 27 stores under the Bottom Dollar banner.

In 2008, Delhaize Group plans to step up its store opening program in the U.S., particularly at Food Lion. It plans to open between 50 and 55 new supermarkets in the U.S., including 40 to 45 Food Lion stores under the banners Food Lion, Bottom Dollar, Bloom, and Harveys, seven Hannaford stores, and four Sweetbay stores. In addition, the Group plans to close approximately nine stores to be relocated, and nine other stores.
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