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Delhaize Plans 450 New Stores in High-growth Operations

During its Dec. 1 analyst meeting in the United States, Brussels-based retail conglomerate Delhaize Group revealed plans to ramp up store openings in its newer operations, including some in American markets, and reach group annual revenue growth of 5 percent to 7 percent within three years. Further cost savings will be generated and used to invest in the many sales-building initiatives that will support increasing growth, according to the company.

“Two years into the execution of the ‘New Game Plan,’ aimed at accelerating revenue and operating profit growth, we are making a lot of progress in a difficult environment,” noted Pierre-Olivier Beckers, Delhaize Group president and CEO, at the meeting in Raleigh, N.C. “We are strengthening our brands, stepping up price investments at all our operating companies, further developing our formats and generating the means to fund these initiatives through structural changes in the way we operate. We have also completed a strategic acquisition of the Delta Maxi operations in southeastern Europe, a move that we expect to substantially change the growth profile of our group. We are confident that our group will be able to seize the many opportunities that come with the challenging environment we operate in. While we continue to be focused on the disciplined execution of the many projects that are ongoing, we are ready to accelerate our store-opening plans.”

Delhaize’s newer operations, combining new markets in southeastern Europe and Asia, and new formats such as Bottom Dollar Food in the United States and Red Market in Europe, have contributed considerably to the company’s revenue and operating profit growth during the first two years of its New Game Plan initiative. With the recent acquisition of Delta Maxi, which operates in five southeastern European countries, Delhaize has further bolstered its base in countries that provide significant potential for growth.

Additionally, the encouraging results of Bottom Dollar Food in the Philadelphia market support plans for expansion in more markets presenting the same growth profile. This will lead to “hundreds” of new Bottom Dollar Food locations over the next five years, Delhaize said.

The company expects to open around 450 stores in its high-growth newer operations from 2012 through 2014, representing a significant acceleration from past years. As a result of this and the encouraging results in the rest of its network, Delhaize anticipates revenue growth of 5 percent to 7 percent annually within three years.

As of the end of the second quarter of 2011, halfway through the three-year period to generate 500 million euros (US $675 million) in annual gross cost savings, the company had realized already about 60 percent of this target. Delhaize now expects to surpass this goal, mainly because of greater savings in cost of goods sold, which will allow the company to invest more in sales-building initiatives depending on the economic and competitive outlooks.

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