Delhaize Posts Q1 Revenue Growth

Delhaize Group, the Brussels-based retail conglomerate whose U.S. banners include Food Lion and Sweetbay Supermarket, reported revenue growth for the first quarter of 2011 of 0.7 percent, or 1.5 percent at actual exchange rates, noting an increase of revenues at all of its segments. What’s more, U.S. comparable-store sales continued to improve for the third straight quarter, which the company attributed mainly to higher retail inflation in the first quarter.

“Our cost savings projects, on track to achieve EUR 500 million gross annual savings by the end of 2012, continue to deliver the fuel to fund the many projects of the New Game Plan,” said Delhaize Group president and CEO Pierre-Olivier Beckers, referencing the company’s ongoing strategy for accelerated growth, increased efficiencies and stronger intra-group integration. “Despite these ongoing cost reductions achieved across all banners, the first quarter of 2011 was, as planned, impacted by expenses incurred for key strategic initiatives that will bear fruit as from later this year.”

In the first quarter of 2011, Delhaize America revenues rose 0.1 percent to $4.7 billion, despite the negative calendar effect of the runup to Easter of -0.9 percent. Comps were at -0.3 percent, a continued trend improvement for the third quarter in a row. In the Southeast, sales trends were stable from the previous quarter. According to the company, the fact that increasing retail inflation supported comparable-store sales evolution while remaining lower than national food inflation was “a clear sign of the consistent application of our pricing strategy.”

The grocer was particularly pleased by the performance of its Hannaford chain, which “had another outstanding quarter,” according to the company. The quarter was also distinguished by the relaunch of Food Lion stores in the Raleigh, N.C., and Chattanooga, Tenn., areas following what Delhaize deemed “important brand reinforcement work.”

“We have relaunched around 200 Food Lion stores in the Raleigh and Chattanooga markets that will serve as phase one of the fundamental repositioning work focused on the brand elements of price, assortment and shopping experience,” explained Delhaize Group president and CEO Pierre-Olivier Beckers. “Helped by what we learn from this first phase, we will roll out the repositioning work to the large majority of the Food Lion network by the end of 2012.”

First-quarter operating profit at Delhaize America fell 13 percent to $216 million, which the grocer believed was mainly because of an increase in selling, general and administrative expenses resulting from new stores contribution, more store remodels, higher repair and maintenance expenses, fees for higher electronic payments in the United States, and costs related to specific projects such as strategic sales-building initiatives at Food Lion and Bottom Dollar Food, although partly offset by continued cost savings.

At the end of March 2011, Delhaize operated 1 635 supermarkets in the United States.