Delhaize Grows Revenue in Q4
Delhaize Group has reported revenue growth in the fourth quarter of 7.6 percent at actual exchange rates, or 1.5 percent at identical exchange rates, noting the improvement of U.S. comparable-store sales evolution, along with continued solid comps growth in its home turf of Belgium. For full year 2010, the retail conglomerate posted revenue growth of 4.6 percent at actual exchange rates (1.0 percent at identical exchange rates), and said that comps had experienced strong growth at Hannaford and Delhaize Belgium, with an improving trend toward year-end at Food Lion.
The positive results led Delhaize to confirm its 2010 operating profit growth guidance and to ramp up its approximately 900 million-euro (US $1.2 billion) investment program, which this year will include 120 to 130 store openings and about 120 store remodels.
“During the fourth quarter of 2010, our revenue growth improved as a result of the continued implementation of our New Game Plan,” said Delhaize president and CEO Pierre-Olivier Beckers. “During the fourth quarter, we have seen a continuation of the encouraging trends of the third quarter at Food Lion. Hannaford again had an excellent quarter. Delhaize Belgium posted excellent sales in the fourth quarter, and as a result continued to grow market share and realized the highest annual comparable-store sales growth in the last seven years despite the lack of inflation.”
For the second year of the investment initiative, “our brands will continue to benefit from the many sales-building initiatives such as price investments, private brand innovation and assortment optimization,’ noted Beckers. “Funding for these initiatives will come from the 500 million-euro (US $679 million) annual gross cost savings that we target to achieve by the end of 2012. We are confident that the many initiatives included in our New Game Plan will allow us to achieve faster growth in the coming years.”
In 2010, Delhaize attained revenues of 20.8 billion euros (US $28.2 billion), representing a 1 percent increase at identical exchange rates, or 4.6 percent at actual exchange rates, due to a stronger U.S. dollar. Organic revenue growth was 0.9 percent. The company attributed its overall 2010 revenue growth to such factors as revenue growth of 4.0 percent at Delhaize Belgium, abetted by a comparable-store sales increase of 3.2, although this was partly offset by a 1.0 percent dip of U.S. revenues at identical exchange rates because of a comparable-store sales evolution of -2.0 percent.
In 2010, Delhaize’s U.S. operations generated revenues of $18.8 billion, a 1.0 percent drop from 2009 in local currency, while comps fell 2.0 percent. “As in 2009, consumer spending remained prudent in 2010 and the competitive environment was promotional, more specifically in the second quarter,” the company said. “In 2010, our U.S. operating companies, in particular Food Lion, made important price investments as part of the New Game Plan. In the second half of the year, our U.S. operations managed to improve underlying volume trends as a result of the price investments made earlier in the year and targeted promotional offers at Food Lion.”
During the fourth quarter, the U.S. banners’ revenue contribution was stable compared with 2009 in local currency, at $4.7 billion, according to Delhaize, which noted a comparable-store sales evolution of -0.8 percent, up from the -1.8 percent posted in the third quarter. “This was the result of the continuation of the improving trends of the third quarter in the Southeast of the U.S. and the return of inflation,” the company explained, adding that its Hannaford chain continued to perform well in this regard.
“Our U.S. retail inflation stayed largely below national inflation as a result of our continued commitment to price investments, one of the main pillars of our New Game Plan,” Delhaize said. “Competitive activity was intense but remained relatively stable compared to the previous quarter.”
The company ended 2010 with 2 800 stores, 68 more than in 2009. In the United States, Delhaize operated 1 627 supermarkets at the close of 2010, having opened 40 stores, 16 of which were discount-format Bottom Dollar Food stores, closed 20 locations, for a net addition of 20 markets. Additionally, Delhaize remodeled or expanded 72 U.S. supermarkets last year, including 31 stores in the Richmond, Va., and Greenville, N.C., markets. In 2011, Food Lion intends to remodel three stores, one of them in Roanoke.
Operating 2,800 stores and employing about 138,000 associates, Brussels-based Delhaize Group is present in six countries on three continents.