Delhaize Improves Revenue Trends in Q1

Delhaize Group has reported Q1 revenue growth of 4.3 percent and underlying profit growth of 26 percent to $250.3 million, along with group underlying operating margin growth of 3.6 percent.

“We have started 2016 with further improving revenue trends,” noted Frans Muller, president and CEO of Brussels-based Delhaize. “In the U.S., although we continued to see deflation, we are also realizing ongoing solid 3.7 percent real growth.”

Added Muller: “We realized a robust performance in our first-quarter profitability. … Although the group benefited from a slightly stronger gross margin mainly in the U.S., profitability was especially boosted by lower SG&A as a percentage of revenues in Belgium and Southeastern Europe.”

Delhaize’s Q1 U.S. revenues increased 1.9 percent to $4.4 billion, while comparable-store sales grew 2.6 percent, excluding a negative calendar impact of 0.5 percent; both Food Lion and Hannaford posted positive comps and real growth.

Both retail and cost inflation remained negative in the quarter, with retail inflation at -1.1 percent for the quarter, driven by price decreases in meat and dairy. Underlying operating profit rose 6.1 percent, while the underlying operating margin grew from 3.8 percent to 3.9 percent. Delhaize attributed the slight increase in gross margin to lower shrink in fresh categories, particularly at Food Lion, but partly offset by the Hannaford price investments made in the fourth quarter of 2015. SG&A as a percentage of revenues remained flat as the positive impact of higher volumes offset higher labor expenses.

Regarding the pending merger with Ahold, which last month was approved by shareholders at both companies, Muller said that “our main focus for this year is to complete the [deal] on schedule. The remaining major milestone is to receive approval from the U.S. Federal Trade Commission in order to be able to complete the transaction by mid-2016.”