Delhaize Group sales up, earnings down for quarter

BRUSSELS, Belgium — The Belgian parent company of Delhaize America reported a 40.6 percent increase in sales over the first quarter of last year.

At the same time, Delhaize Group’s net earnings decreased 33.4 percent because of financial expenses and the cost of acquiring the Hannaford Bros. grocery chain.

The Delhaize America subsidiary, whose major banner is Food Lion, reported a 37.3 percent decrease in first quarter earnings, compared to the same period last year.

Earnings before Hannaford merger costs dropped from $67.7 million in the first quarter of 2000 to $42.4 million in the first quarter of 2001.

After considering the Hannaford costs, Delhaize America earnings dropped to $27.9 million.

But Pierre-Olivier Beckers, president and chief executive officer of Delhaize Group, said he was “very satisfied” with the company’s first quarter results. He emphasized the company’s sales and improvement on cash flow margin.

Officials pointed to good sales momentum at all three American banners — Food Lion, Hannaford and Kash n’ Karry — continuing gross margin improvement over the last several quarters and good cost control. All three chains increased their market share, officials said.

The company also said it realized $10 million in savings from the Hannaford Bros. merger — benefits from “best practices and synergy development.”

Delhaize Group’s cash flow from operations increased by 51.2 percent in the first quarter of 2001. Compared to 2000 figures, adjusted for Delhaize America’s results on a 13-week basis, the increase amounted to 44.2 percent.

The Group said its two largest companies, Delhaize America and Delhaize Belgium, had strong comparable store sales of 3.9 and 7.1 percent respectively.

At the end of the first quarter 2001, Delhaize America was operating 1,425 supermarkets. Nine new stores, including two relocated stores were added, two stores were closed while 26 stores were renovated during the quarter.

In 2001, total sales of Delhaize America are expected to grow 17 to 18 percent, with comparable store sales growth to be 1.5-2 percent. Cash flow from operations is expected to increase 25 to 30 percent.