Delhaize Group's Q1Earnings Jump 14.5 Percent

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Delhaize Group's Q1Earnings Jump 14.5 Percent

BRUSSELS -- Delhaize Group's first-quarter net profit increased 14.5 percent at actual exchange rates, the retailer said yesterday, while sales fell 0.5 percent from a year earlier to 4.71 billion euros ($6.39 billion), due to the weak dollar.

The retail conglomerate's performance was helped by Food Lion and its other U.S. operations, which experienced 4.1 percent comparable store sales growth. Meanwhile, Delhaize's Greek business saw double-digit organic sales growth for the fourth consecutive quarter.

"Our dynamic commercial strategy, combined with our disciplined cost management and decreased net financial expenses, resulted in excellent sales and profit for the quarter," said Pierre-Olivier Beckers, president and c.e.o. of Delhaize Group, in a statement.

Net profit from continuing operations increased by 12.6 percent to 110.1 million euros ($148.9 million).

The contribution of U.S. operations amounted to $4.4 billion (EUR 3.3 billion), an increase of 5.6 percent over 2006, supported by strong comparable store sales growth of 4.1 percent.

Sales in the U.S. were helped by continued good momentum at Food Lion and Hannaford, the company said, citing market renewals and customer segmentation work at Food Lion, continued investments in prices, and disciplined execution in the stores and ongoing assortment improvement.

Delhaize said that well-executed and more aggressive price and marketing initiatives, combined with more effective store openings, resulted in improved sales trends at Sweetbay.

The operating margin of the U.S. business increased by 10 basis points to 5.5 percent of net sales and other revenues, due to margin management and price optimization, less depreciation costs (as a percentage of sales), and lower operating expenses vs. the previous year at Hannaford as a result of a cost reduction program implemented in 2006.

The operating profit of the U.S. business of Delhaize Group grew by 7.7 percent to $240.6 million.

In 2007, Delhaize Group plans to open approximately 47 new supermarkets in the U.S. In addition, the company plans to close approximately 14 stores and to relocate 10 stores, resulting in a net increase of 23 stores to a total number of 1,572 stores at the end of 2007.

Approximately 207 U.S. stores will be remodeled in 2007. Food Lion will remodel 142 stores as part of its market and store renewal programs. All remaining Kash n' Karry stores will be re-launched under the Sweetbay Supermarket brand before the end of September 2007, finishing the massive conversion project started in 2004.