Delhaize Cites Improvements

MARK HAMSTRA

BRUSSELS — Delhaize Group here said comparable-sales fell 0.8% in the U.S. in the fourth quarter, an improvement over recent results that was driven by strong sales at the Hannaford Bros. banner and gains in the Southeast.

The company also said it would ramp up its new-store growth in 2011, primarily in its overseas markets, but also with its “soft discount” Bottom Dollar Food format in the U.S.

After misfiring with its promotional strategy earlier last year, the company's Food Lion banner, based in Salisbury, N.C., became more aggressive in its pricing and more targeted in its promotions in the second half of 2010, and the effort is gaining some traction, Delhaize said.

“During the fourth quarter, we have seen a continuation of the encouraging trends of the third quarter at Food Lion,” said Pierre-Olivier Beckers, president and chief executive officer, Delhaize Group. He added that the company's Scarborough, Maine-based Hannaford Bros. banner “again had an excellent quarter.”

The company said its retail price inflation was below national levels as it sought to remain competitive. “Competitive activity was intense but remained relatively stable compared to the previous quarter,” the company said in a statement.

Comparable-store sales for the year were down 2% in the U.S.

Total revenues for the U.S. operations, which include the Bottom Dollar and Sweetbay banners in addition to Food Lion and Hannaford Bros., were flat at about $4.7 billion for the fourth quarter and down about 1% for the year, to $18.8 billion.

Total revenues for the company in 2010, which included revenue gains at operations in Europe and Indonesia, were about $28 billion (U.S.), up about 1% at identical currency exchange rates or 4.6% at actual rates.

Delhaize ended 2010 with 1,627 supermarkets in the U.S., as a result of opening 40 stores (16 of which were Bottom Dollar discount locations) and closing 20 stores.

In 2011, Delhaize said it plans to invest about $1.23 billion in capital expenditures to open 120 to 130 new stores worldwide and remodel another 120 locations. It also plans to close 20 stores. That compares with the net addition of 68 locations in 2010.

“We will continue to step up the expansion of our Bottom Dollar Food format in the U.S. and of our Greek, Romanian and Indonesian operations,” the company said. Last year, after splitting Bottom Dollar off into its own division, Delhaize rolled the chain out aggressively in the Philadelphia market.

“We believe Bottom Dollar Food has great potential in this market because it is underserved in the soft-discount grocer arena, and customers are embracing our model,” Tenisha Waldo, a Bottom Dollar Food spokeswoman, told SN.

She declined to comment on expansion plans for Bottom Dollar, which currently has 45 stores in five states.

Delhaize also confirmed its guidance for operating profit growth for the recently ended fiscal year, but said it would no longer provide guidance on operating profit growth. For 2010, operating profit growth is projected to be within 2%, plus or minus, of prior-year levels, at identical exchange rates and excluding charges of about $60 million in 2009.