SALISBURY — Food Lion’s parent company on Thursday announced underlying profits fell last year by 17.5 percent, triggered by decreased margins due to price cuts and the costs of store closures.
Delhaize Group, a Belgian supermarket retailer, also said it plans to lower its stock dividend for the first time in 10 years.
In a presentation on financial highlights from 2012, Delhaize announced it will accelerate the brand overhaul at remaining Food Lion stores. So far, 62 percent of 1,127 Food Lion stores in 10 states have been rebranded, leading to volume growth and positive comparable same store sales for Food Lion in the fourth quarter of 2012, Delhaize said.
Delhaize, which generates 64 percent of its revenue in the U.S., does not release earnings by grocery chain. Food Lion and Delhaize America are headquartered in Salisbury, where Food Lion was founded in 1957.
Delhaize America has been trying to turn around Food Lion, its largest banner, with price cuts, fresher produce, less cluttered aisles, more private labels and other changes.
The Delhaize Group Board of Directors will propose to shareholders in May a 20 percent cut in the dividend payment.
“The decision to decrease the dividend this year is a clear example of Delhaize Group’s commitment to maintaining its financial strength and achieving revenue growth,” said Pierre-Olivier Beckers, president and CEO.
While its profit margin in the U.S. will continue to decline in 2013 due to additional price cuts, Delhaize said cost savings and narrowing losses at the Bottom Dollar Food and Sweetbay chains should help contain the decline.
Delhaize closed 33 unprofitable Sweetbay stores in February in Florida, along with eight Food Lion stores and three Bottom Dollar stores.
Also last month, Delhaize America eliminated 500 corporate-level jobs.
In January 2012, Food Lion closed 113 underperforming stores and pulled out of Florida. Delhaize also shut down the Bloom brand.
Earlier this year, new Delhaize America CEO Roland Smith removed Cathy Green Burns as president of Food Lion. Fifteen officers lost their jobs in the shake-up, a 25 percent decrease in top management positions.
Contact reporter Emily Ford at 704-797-4264.