Delhaize CEO: Trends Favorable

MARK HAMSTRA

BRUSSELS — The chief executive officer of Delhaize Group here said the recent increase in merger and acquisition activity in the U.S. supermarket industry could benefit Delhaize America as more acquisition opportunities arise and the remaining players stabilize.

“It is an opportunity to focus on a few acquisitions that make sense for us,” said Pierre-Olivier Beckers in a conference call discussing the company's year-end results. “Also, as the market concentrates, stronger retailers tend to have a more rational strategy, and this creates a more stable environment in the future.”

Safeway, Pleasanton, Calif., has also said the recent spate of industry consolidation — which includes the sales of Albertsons, Wild Oats and Pathmark to Supervalu, Whole Foods and A&P, respectively — creates more opportunities for acquisitions of cast-off stores.

Delhaize pointed out that its position on acquisitions has not changed — that it prefers to look for in-market and adjacent acquisitions that make sense for its U.S. banners, which include Food Lion, Hannaford Bros. and Sweetbay.

In the U.S., Delhaize reported fourth-quarter operating profit gains of 1.7%, to $264.7 million, on sales of $4.37 billion, up 3.8%. Comparable-store sales for the period rose 2.2%. For the full year, the company posted operating profit gains of 6.6%, to $961 million in the U.S. A focus on price helped drive comparable-store sales gains of 2.7% and overall sales growth of 4.4%, to $17.3 billion.

The company projected comps in the range of 2.5% to 3.5% for the U.S. in 2007.

Beckers said the company has seen some “good early results” from a more aggressive price positioning at Sweetbay, the chain in Florida that it is converting from the Kash 'n Karry banner. The last 30 stores will be converted this year.

In other news, Delhaize said it named Michel Eeckhout chief executive officer, Delhaize Belgium, and tapped Terry Morgan, Food Lion's chief information officer, to succeed him in that same role for Delhaize Group. Eeckhout succeeds Arthur Goethals, who is retiring.