Q3 Comps at Delhaize U.S. Banners Highest Since 2000

BRUSSELS, Belgium -- Delhaize Group, the parent company of Food Lion, Hannaford, and Sweetbay Supermarkets, said yesterday its U.S. banners achieved 4.6 percent comparable store sales growth in the third quarter -- their highest gain since 2000.

"Revenue growth at both Food Lion and Hannaford stayed strong, particularly through increasing customer traffic," said Pierre-Olivier Beckers, Delhaize's president and c.e.o., in a statement. "Sweetbay realized its best comparable store sales growth since the launch of the conversion project, showing encouraging signs in the rebranding of our Florida business."

Despite the positive results in the U.S., however, Delhaize's overall numbers missed expectations, as group sales dipped on foreign exchange pressures.

The company's overall revenue growth was 4.2 percent at identical exchange rates. (Revenues decreased by 1.3 percent to EUR 4.7 billion, or $6.97 billion, because the U.S. dollar weakened by 7.2 percent.) Revenues at the U.S. banners jumped 5.4 percent to $4.652 billion.

The sales momentum at Food Lion was supported by effective price, promotion, and marketing initiatives; improved assortment; a focus on execution in retail stores; and the continued success of market renewal initiatives, according to Delhaize. Hannaford's sales were supported by targeted pricing, initiatives such as Guiding Stars, and new store openings.

During the quarter, Sweetbay completed the three-year project to convert all its stores from Kash n' Karry. The conversions and significant investments in price resulted in the highest comparable stores sales at Sweetbay since the start of the conversions, Delhaize said.

Operating profit decreased 6.0 percent at actual exchange rates and grew 0.5 percent at identical exchange rates. Adjusted for a 2006 one-time U.S. benefit plan impact, operating profit would have grown 6.2 percent at identical exchange rates.

Operating profit of the U.S. business grew by 2.5 percent to $261.7 million. Adjusted for the 2006 one-time U.S. benefit plan impact, operating profit would have grown 9.0 percent.

Price investments in Belgium, Hannaford, and Sweetbay were offset by margin optimization and sales mix improvements, especially at Food Lion, and better inventory management at Hannaford and Sweetbay, the company said.

In the third quarter, Delhaize Group opened six new stores, closed two stores, and remodeled 50 supermarkets in the U.S. Food Lion converted 10 Food Lion stores to the Bottom Dollar banner in the Norfolk, Va. market and prepared the launch in the fourth quarter of 66 renewed Food Lion and eight Bloom conversions in the same market.
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