BRUSSELS, Belgium -- Delhaize Group here said last week it would accelerate the rollout of the market-by-market remodeling initiative at its Food Lion chain with the extension of the program to the Greensboro, N.C., market in the next few weeks.
The news came as Food Lion confirmed previous reports that it had acquired five Winn-Dixie supermarkets in Virginia and bought another five locations in North Carolina, for a total of 10 stores. Terms of the cash purchase were not disclosed. The stores, which measure about 34,000 to 38,000 square feet, will be converted to Food Lions.
In a conference call with analysts discussing Delhaize's third-quarter results, Pierre-Olivier Beckers, chief executive officer, Delhaize, said the remodeling effort in the Raleigh, N.C., market, which was completed last year, was exceeding expectations. In October, the chain completed its second marketwide overhaul in Charlotte, N.C.
The 70-store Greensboro market, where Beckers said Food Lion holds the No. 1 share with about 30% of the market, is scheduled to be relaunched by the middle of next year. Rick Anicetti, CEO, Food Lion, said the Charlotte market was remodeled for 20% less than what was spent in Raleigh as the company focused on the changes that have been most effective in driving sales.
"Raleigh was about research and development," he said. "Raleigh was about putting our best foot forward. You only get one chance to reintroduce yourself, and we think we did that extremely well in Raleigh. Since then, we've been able to determine what amount of that spend gave us the greatest value."
Delhaize also reported progress in its other U.S. initiatives, including the opening of its first Sweetbay Supermarket in Seminole, Fla. (see story beginning on Page 32), and the conversion of five Food Lion stores to the Bloom concept, a format focused on convenience.
In addition, Beckers said Delhaize would convert another 12 Food Lion stores to the Harvey's banner. The company has already converted 12 Food Lion stores to Harvey's this year after acquiring the banner last year. The company reported in the call that it has had double-digit sales growth in those stores.
Beckers said the Tampa, Fla.-based Kash n' Karry banner, operating under new management since last year and leveraging purchasing synergies from sister chain Hannaford Bros., has shown improved performance, particularly in the produce, meat and seafood areas.
Delhaize reported that net income in the United States was up 38%, to $87.3 million, on a 4.5% increase in sales, to $3.99 billion, in the 13-week third quarter ended Oct. 2, compared with year-ago results. Through 39 weeks, net income was $197.1 million, up 5.5%, on a 5.9% sales increase, to $11.84 billion. Same-store sales in the United States increased 1.7% in the quarter and 1.9% for the year to date.
Craig Owens, chief financial officer, declined to break out sales results for individual banners, but did say same-store sales at all U.S. banners were positive in the third quarter and were generally stronger in the northern reaches of the company's territory.
For Delhaize Group in total, which includes the company's operations in Europe and Asia, net income was up 33.2% in the third quarter, to 71.2 million euros (about $92 million), on a sales decline of 3.2%, to 4.54 billion euros, or about $5.85 billion. Year-to-date, net income rose 33%, to about $187.2 million, on a decrease in sales of 3%, to about $17.4 billion. The sales declines reflected a decrease in the value of the dollar of 8% against the euro.