BRUSSELS — Delhaize Group here last week said strong sales at Hannaford Bros. and Food Lion, among other factors, helped drive double-digit profit gains in the second quarter.
The company posted a 16% gain in U.S. operating profits for the period, to $252.2 million. Comparable-store sales in the U.S. rose 2.8% in the quarter.
“In the second quarter, our margins continued to evolve favorably due to good cost control, sales mix improvements, price optimizations and inventory management,” said Pierre-Olivier Beckers, president and chief executive officer, Delhaize, in a conference call with analysts.
He also identified the next targets of Food Lion's “market renewal” program to be Wilmington, N.C.; Savannah, Ga.; Richmond, Va.; and Charlottesville, Va. The 110 stores in those markets will be remodeled with a “multi-brand approach” that could include the chain's Bloom and Bottom Dollar banners, Beckers said. As previously reported, the company plans to reopen about 80 stores under the three banners by the end of this year in Norfolk, Va. In May, the company reopened 20 remodeled stores in Myrtle Beach, S.C., as part of that market's renewal program.
Craig Owens, chief financial officer, Delhaize, said Food Lion saw comp-store sales gains in all five of its geographic regions in the quarter, even those that have not been part of the “market renewal” process.
The company said it is continuing an aggressive price campaign at its Sweetbay banner in Florida, which it is converting from the former Kash n' Karry stores.
“We are encouraged by what we are seeing across the entire base of Sweetbay stores with that investment, but it is very, very early in that process,” said Ron Hodge, CEO of Hannaford, which also oversees Sweetbay.
The price promotions launched early last month, he said. Beckers noted that “there is yet much to do and accomplish in order to reach profitability” at Sweetbay.
At Hannaford, Hodge said the company grew its market share in the second quarter, despite the promotion of a new EDLP program at Stop & Shop.
Delhaize executives said they have not seen any changes in consumer behavior because of economic conditions, such as the weak housing market, inflation or high gas prices. The company said it has been able to pass through to consumers the cost increases it has seen from suppliers.
The company said revenues in the U.S. were up 4.2% in the quarter, to $4.55 billion. Revenues for the entire company, which also includes operations in Belgium, Greece and other markets, were down 0.4% at actual exchange rates, but up 4.7% at identical rates, to about $6.6 billion. Net income was down about 12%, to about $116.2 million.