U.S. Ops Help Prop up Delhaize Group's Q4

Delhaize Group, the Brussels, Belgium parent company of the Food Lion, Hannaford, and Sweetbay Supermarket chains in the U.S., yesterday reported continued strong comparable store sales growth for the fourth quarter. The positive U.S. store performance was a highlight in an otherwise lackluster quarter influenced by the weak U.S. dollar.

The supermarket conglomerate also said in 2008 it plans to significantly ramp up new store openings.

The global retailer's total fourth-quarter sales at were 4.7 billion euros  ($7.23 billion), a decrease of 3.4 percent compared to the same period in fiscal 2006. The company attributed the drop to an 11 percent weaker U.S. dollar vs. the euro. At identical exchange rates, revenues grew by 5 percent, supported by 3.7 percent comparable store sales growth in the U.S., 1.3 percent growth in Belgium, and an impressive 15.2 percent growth in Greece, Delhaize said.

Net profit from continuing operations decreased by 0.6 percent to 121.3 million euros ($186.73 million). At identical exchange rates, net profit from continuing operations would have increased by 7.4 percent.

In the U.S., sales were up 5.1 percent to $4.6 billion, while operating profit increased 1.3 percent to $268.1 million.

The company also said full-year 2007 revenues from U.S. operations grew 5.1 percent to $18.2 billion. Revenue growth was supported by comparable store sales growth of 3.8 percent, and more store openings, particularly at Food Lion.

"We realized the strongest sales momentum in years in our U.S. and Greek operations [in 2007], and we held our industry-leading operating margins due to a better sales mix and disciplined cost management," said Pierre-Olivier Beckers, president and c.e.o. of Delhaize Group, in a statement. "Despite the increasingly uncertain economic environment, the strong performance continued in the fourth quarter in the U.S. and Greece, while our Belgian operations recovered after a challenging third quarter."

At Food Lion, the market renewal program and customer segmentation work continued to bear fruit in 2007, according to the company. Hannaford, meanwhile, further achieved strong revenue growth, supported by its competitive pricing and innovative strategy. At Sweetbay, where the final Kash 'n Karry stores were converted to Sweetbay supermarkets in the summer of 2007, revenue growth of most stores was strong in the second part of 2007.

Delhaize Group finished the year with 1,570 supermarkets in the U.S.

Looking ahead to 2008, Beckers said: "As reflected in our current guidance, 2008 promises to be another dynamic year. We continue to implement new initiatives in our existing stores aimed at increased differentiation from our competition. We plan a major step-up in our store opening plan with an increase of our sales network by approximately 150 stores. We are mindful of the more difficult consumer and inflationary outlook, but we believe we are prepared to seize market share opportunities in such an environment thanks to our value proposition, our low cost base and our strong balance sheet."

In 2008, Delhaize Group said it plans to open between 50 and 55 supermarkets in the U.S. This represents a significant step-up in store openings compared with previous years, particularly at Food Lion. In addition, the company plans to close approximately nine stores to be relocated, and another nine stores in the normal course of business.

Approximately 150 U.S. stores will be remodeled in 2008. Food Lion will remodel 141 stores as part of its market and store renewal programs. Four market renewals are planned for the year: Wilmington, N.C.; Richmond, Va.; Charlottesville, Va., and Savannah, Ga.
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