BRUSSELS - Delhaize Group here said sales at its Hannaford Bros. chain in New England were weak in the first quarter this year relative to last year because of the lack of severe winter weather in 2006, but strong sales at Food Lion helped compensate.
In a conference call discussing earnings for the first quarter, which ended March 31, Delhaize said Hannaford retained market share despite the slump and has seen sales rebound in the second quarter.
"This year, we had virtually no storms in Q1, and of course no stock-up buying that goes along with it," said Ron Hodge, chief executive officer, Hannaford. "So far, our spring sales - the end of the first quarter and early second quarter - have shown a very sharp improvement."
The company, which also owns the Sweetbay/Kash n' Karry and Harveys chains in the Southeast, posted comparable-store sales gains of 1.4% at its U.S. operations in the period. Excluding the impact of last year's early Easter, comparable-store sales were up 1.7%, the company said.
Delhaize does not break out specific sales results for individual banners.
At Food Lion, Delhaize said improved shrink levels and a better sales mix helped drive a 22-basis-point improvement in gross margins. Sales of organic product in Food Lion's Nature's Place departments were up 95%.
"We are very excited about the accelerating momentum of our business," said Rick Anicetti, CEO, Food Lion. "It is being seen broadly across all of the Food Lion operating territory - we are getting more and more confident of its structural nature. In fact, it is significantly greater than any advantage we have gained as a result of closed Winn-Dixie stores."
Delhaize also said sales of fresh and private-label product at its price-impact Bottom Dollar stores are exceeding expectations. As previously reported, the company is converting 14 Food Lion stores in the Washington, D.C., market to Bottom Dollar, and another 40 to Bloom, its convenience-oriented format.
The company said it expects to see sales ramp up at its Sweetbay stores in the third quarter as it completes more remodels in its core Tampa, Fla., market. The chain currently has about 25 Kash n' Karry stores under construction to be converted to Sweetbay.
In the first quarter, Delhaize said U.S. operating profit rose 7.1% to $223.5 million, on a sales gain of 2.9% to $4.15 billion, vs. year-ago results.
Overall Delhaize reported a 19.7% increase in net income to 97.3 million euros, or about $124.8 million, on an 11.3% increase in sales to $6.16 billion. Some of the gain was attributable to the rising exchange rate of the U.S. dollar against the euro, which increased by 9.1% over year-ago levels. At identical exchange rates, net income was up 12.2% on a sales gain of 4.6%.
