Food Lion parent company posts better-than-expected earnings in second quarter

SALISBURY — New Food Lion president Beth Newlands Campbell pointed to a stronger-than-expected earnings report from parent company Delhaize Group as reason for optimism as she works to restore customer loyalty at Food Lion.

Delhaize, an international food retailer based in Belgium, beat second-quarter profit expectations with help from continued growth at its U.S. stores, including Food Lion.


For the three-month period ending in June, Delhaize’s adjusted operating profit rose 5.8 percent to $257.06 million, surprising analysts who had expected a 4.9 percent decline, according to a Reuters poll.

“We just had three consecutive quarters of volume growth, really good results,” Newlands Campbell told the Salisbury Post. “I think we’re positioned well to continue to grow from that.”

For the first half of the year, Delhaize’s underlying operating margin in the United States was 4.1 percent, compared with 3.8 percent last year.

Based on the positive earnings, Delhaize has bumped up its full-year forecast and now expects to make $1.04 billion in 2013, up from $1.03 billion originally projected.

That number still includes Sweetbay, Harveys and Reid’s, which Delhaize is selling to Bi-Lo. Without those chains, the annual company profit is expected to come to $1 billion.

Buoyed by signs that cost-cutting efforts in the U.S. market are paying off, Delhaize Group stock price jumped from $64 to $72 per share after the earning report Aug. 8, climbing to a two-year high in Brussels trading. The stock leveled out last week at about $70 per share, closing Friday at $68.69.

Delhaize makes about two-third of its revenues in the United States and has been cutting costs, including revamping Food Lion stores to counter stiff competition from low-price leaders like Walmart and Aldi.

Delhaize has closed more than 120 Food Lion stores in the past two years and laid off 350 executive employees in February as part of a reorganization that started in December 2012 with the ouster of Cathy Green Burns as Food Lion president.

Salisbury-based Food Lion is the largest subsidiary of Delhaize Group. Delhaize America is headquartered in Salisbury, as well as Food Lion’s sister chain Bottom Dollar Foods.

“Our group has delivered solid results for the second quarter,” Pierre-Olivier Beckers, Delhaize Group president and CEO said Aug. 8. “In the U.S., we experienced our third consecutive quarter of positive volume growth.”

Beckers said 178 additional Food Lion stores were revamped in the second quarter of 2013, bringing the total of repositioned stores to almost 80 percent of the chain.

Delhaize also cut prices at Hannaford, Food Lion’s sister chain where Newlands Campbell had served as president since 2010 until she was tapped to run Food Lion last year.

Contact reporter Emily Ford at 704-797-4264.

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