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Delhaize Group's U.S. Banners Help Drive 2Q Profit

BRUSSELS - Delhaize Group cited better sales and tighter cost controls yesterday as it reported its second-quarter results, which included net earnings of EUR 81.9 million ($98.3 million), compared to EUR 9.3 million the previous year. The Brussels-based international retailer, which operates several U.S. banners, also announced its decision to divest its loss-making subsidiary, Food Lion Thailand, through the sale and closure of its 26 stores.

"We are very pleased with our strong second quarter results," said Pierre-Olivier Beckers, president and c.e.o. of Delhaize Group, in a statement. "Our successful commercial strategies resulted in continued strong sales momentum in the U.S. and Belgium. The operating margin in the U.S. and Belgium increased significantly, thanks to the good sales and continued cost discipline. As a result, we are confident that we will achieve our goals for the year."

Delhaize's U.S. operations achieved $4 billion in sales, an increase of 5.4 percent over the second quarter of 2003, due to the rise of comparable store sales by 1.4 percent and the expansion of the store network to 1,493 stores. The sales trend remained strong in the second quarter at the four U.S. banners: Food Lion, Hannaford, Kash n' Karry, and Harveys.

Operating profit of the U.S. operations increased by 24.3 percent to $203.4 million, thanks to the continued sales growth and a significant increase of the operating margin to 5.1 percent compared to 4.3 percent the previous year. The margin increase was supported by ongoing initiatives in cost and expense reductions at Food Lion and Hannaford, better shrink control at Food Lion, and a better sales mix throughout the organization.

In May 2004, Food Lion successfully opened its first Bloom store, a new supermarket format focused on driving convenience to a level of distinction, which will be featured in the Sept. 1 issue of Progressive Grocer magazine. During a conference call yesterday, Beckers said the first Bloom store has so far exceeded the company's expectations in terms of sales, traffic, and customer excitement. Four more Bloom stores are planned to be opened in the fall of this year.

Food Lion is also on track for a grand re-opening in the fall of 2004 in Charlotte, N.C. This second full market remodel is building on the continued success of the first full market remodel in Raleigh, N.C. last year.

Kash n' Karry, meanwhile, is in preparation for the launch of Sweetbay Supermarket in Naples and Ft. Myers, Fla., in late 2004.

Delhaize Group is a Belgian food retailer present in 10 countries on three continents. At the end of June 2004, Delhaize Group's sales network consisted of 2,549 stores.
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