BRUSSELS — Sales at Sweetbay Supermarkets have improved markedly since rolling out aggressive price cuts, but the chain is still not profitable, according to its parent company, Delhaize Group, based here.
In a conference call discussing third-quarter results, Pierre-Olivier Beckers, chief executive officer, Delhaize, said Sweetbay's operational and pricing initiatives resulted in “strong sales growth in the quarter in most Sweetbay stores,” but he also noted, “We still have much work to build a profitable business.”
The company did not break out specific sales and profit figures for the chain, which it recently completed converting from the Kash n' Karry banner.
Sales overall in the U.S. improved 5.4%, to $4.65 billion, driven by increased customer traffic at both Food Lion and Hannaford Bros., the company said. Food-cost inflation was up by about 3% in the quarter, and was expected to “continue to be a factor in the coming months,” said Craig Owens, chief financial officer. He said inflation costs were passed along to consumers in full at Food Lion, but not as much at Hannaford and Sweetbay.
Comparable-store sales in the U.S. were up 4.6% for the period. Based on the sales gains year-to-date, Delhaize raised its comp-store guidance in the U.S. for the year to between 3.5% and 4%, up from a previous range of 2.5% to 3.5%.
U.S. operating profit rose 2.5% in the third quarter, to $261.7 million. Year-to-date operating profit was up 8.4%, to $754.5 million, on a 5.1% gain in revenues, to $13.58 billion.
Among the initiatives the company discussed in the conference call were plans to roll out a new companywide private-label program for chilled, prepared meals called On the Go Bistro. The company said one of its Belgian vendors was currently establishing a facility near Philadelphia to work exclusively with Delhaize on the project.
At Food Lion, the company has modified the product assortment at 164 stores so far, based on segmentation and clustering data.
The weakened U.S. dollar hurt Delhaize's overall net income and revenues for the third quarter. Net income from continuing operations at actual exchange rates fell 2.1%, to $156.5 million, while revenues slid 1.3%, to $7 billion. At identical rates, net income from continuing operations rose 4.6% on a 4.2% gain in revenues.