BRUSSELS — Investments in pricing and private label are helping Delhaize Group manage a difficult consumer environment, the company, based here, said last week.
In the U.S., an emphasis on pricing and private-label goods boosted quarterly sales momentum despite reduced volumes at Food Lion and Hannaford Bros., Pierre Oliver-Beckers, chief executive officer, said in a conference call.
“We believe the rollout of the common private-label assortment in the U.S. could not have been timed better,” he said. “As private-label sales continue to increase, so does the consumer's loyalty to our brands and the positive impact to our gross margins.”
Efforts including in-store food-tasting stations and the introduction of chilled meals under the On the Go Bistro label helped sales of private-label items exceed 19% of total sales at Food Lion, up from about 17% at the beginning of 2007, Beckers said. In addition, he said, all of Delhaize's banners increased their price investments and price-focused advertising during July and August, which helped boost sales momentum.
U.S. sales grew by 3.8% to $4.8 billion for the quarter, with comparable-store sales up 2.5%, following a 4.6% comp-store sales gain in last year's third quarter. Transactions at Sweetbay increased during the quarter.
Greater private-label penetration helped operating profit in the U.S. improve by 3.5% in the quarter.
Overall, Delhaize reported $134.8 million in net income, a 3.9% increase at identical exchange rates, on revenues of $6.1 billion.
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The company has begun to integrate supply chains and information systems at its U.S. banners, with a goal to reduce overall cost of goods and transportation expenses while improving overall product freshness.
A Hispanic-focused pilot Food Lion store launched this summer in North Carolina will get a “major rollout” in 2009, said Beckers.
Ron Hodge, CEO of Hannaford, said that chain has maintained market share in its Northeast markets despite a rebounding of a major competitor, Stop & Shop. “I know there's been some talk about Stop & Shop showing some improvements, and I think that's generally true in total for their business, but where we operate against them, we continue to maintain our share,” Hodge said. “If they're gaining share, it's not from us.”