SALISBURY POST

Salisbury’s Lion is hungry again, but after 42 years of strictly Southern cuisine, it’s hoping to spice up its stock with a dish of Thai.

Food Lion executives outlined plans to invest $10 million into a 10-store chain of grocery stores in Bangkok, Thailand, during the company’s annual shareholders meeting Thursday morning at Catawba College.

Food Lion’s new team of top executives tried to convince stockholders that despite ‘‘stellar’’ financial performance this year – record sales of $10.2 billion and record earnings of $273 million – the value of Food Lion stock won’t catch up with other chains until large-scale ‘‘institutional’’ investors view Food Lion as an aggressive firm bent on acquisitions.

Bill McCanless, who last month replaced Tom Smith as Food Lion CEO, recognized the frustration stockholders must feel when faced with sparkling finances but stagnant stock prices.

‘‘I know how you feel: That’s all well and good, but when is the stock going up?’’ McCanless said in the only unprepared part of his speech.

Robert Ketner, son of Food Lion co-founder Ralph Ketner, noted in the meeting that since 1988, the value of Food Lion stock has risen 40 percent – a paltry amount compared to a fourfold increase in the value of Winn-Dixie’s stock and a 750-percent appreciation of Albertson’s stock.

According to McCanless and Pierre Beckers, chairman of the Food Lion board of directors, investing $10 million into Thailand may help break the relative poor performance of Food Lion stock that has befuddled the company under Smith’s reign as president and CEO.

Smith retired suddenly in April as Food Lion president, CEO and chairman of the board.

McCanless stressed at the meeting that he wasn’t appointed as CEO to ‘‘turn this company around. Tom Smith ran this company very well.’’

Indeed, much of the new leadership’s plans revolve around business practices championed by Smith. For instance, McCanless assured stockholders there is room for ‘‘organic growth’’ in the company’s core market in the Southeast through the ‘‘ink blot approach’’ to expansion, which entails adding stores in areas that can be served by Food Lion’s existing distribution network.

Joe Hall, Food Lion chief operating officer, outlined other new initiatives for the company’s 1,141 stores, including self-checkout lanes, in-store banks and The Medicine Shoppe pharmacies.

Though some local stockholders at the meeting applauded McCanless’ appointment as new CEO and Beckers’ election as chairman of the board, others worried that the new management team – and its overseas plans – may signal even tighter control of the corporation by its foreign stockholders.

Beckers also serves as CEO of Delhaize, a Belgian company specializing in international retail. For more than 20 years, Delhaize has owned the largest single block of Food Lion stock. The company now depends on Food Lion for about 70 percent of its profits.

As the majority stockholder, Delhaize enjoys an insurmountable advantage in picking who serves on the Food Lion board of directors. With the election Thursday, Delhaize officials hold four of the 10 board seats.

Some Salisbury stockholders remain uneasy about Delhaize’ influence over Food Lion’s plans, and said so at the meeting.

During a question-and-answer session, one man stood and asked McCanless if it were possible for individual shareholders to elect a board member without the support of Delhaize. McCanless answered, ‘‘It’s been that way for 20 years. It’s nothing new.’’

The man responded: ‘‘Then why spend the money to tabulate the votes?’’

Ralph Ketner, Food Lion co-founder and one of its largest individual stockholders, wrote a letter to McCanless earlier this week criticizing the Thailand proposal and complaining of Delhaize’s influence in electing Food Lion board members.

In the letter, Ketner asked if ‘‘Food Lion management (has) so quickly forgotten its Texas fiasco.’’ Food Lion invested almost $300 million in the late ‘80s and early ‘90s in an unsuccessful attempt to break into the Southwest market.

In an interview before the shareholders meeting, McCanless said he believes Texas and Thailand are ‘‘two totally different situations.’’

‘‘First of all, in the Thai situation, Delhaize has already been there for several years,’’ he said. ‘‘They studied the market. They came up with a concept that fits well with the market. It’s been running now for several years, and they’re beginning to have name recognition.’’

Beckers agreed that the two situations are much different. ‘‘In Texas, you had competition that was fairly structured and mature,’’ he said. ‘‘Now in Thailand with 60 million people, you have just a few hundred supermarkets and that includes some fairly small stores, self service as well. So the opportunity is there.’’

At the meeting, Beckers said, ‘‘We want Food Lion to be a part of the consolidation in the U.S. retail sector, and we are actively looking for opportunities that would give Food Lion new areas of development in the future. If a worthwhile acquisition target becomes available, Delhaize will consider providing additional financial support, if needed to make the deal happen.’’

Ketner was the last shareholder to speak during Thursday’s meeting. He asked McCanless if he planned to answer his questions in writing.

McCanless said yes, and Ketner suggested he do so in an open letter to the Salisbury Post and Charlotte Observer.

McCanless did not waiver in his belief that Delhaize offers Food Lion valuable expertise in the global marketplace, and that growth outside the U.S. is the best way to break into new markets where competition is less severe.

Delhaize owns grocery stores in Belgium, France, the Czech Republic, Greece and various Asian countries. The firm bought two ‘‘Bel-Thai’’ stores in Bangkok a few years ago and has since expanded to 10 stores. Delhaize approached Food Lion about the project after a partner in Thailand backed out of the project, according to Beckers.

The six members of the Food Lion board of directors not directly affiliated with Delhaize must approve the $10 million investment, which would provide Food Lion with 51-percent ownership of the chain. These members, elected Thursday, are: McCanless; Margaret Kluttz, former Salisbury mayor and N.C. Board of Transportation member; Joseph Hall Jr., Food Lion chief operating officer; Dr. Bernard Franklin, president of St. Augustine College in Raleigh; William Ferguson, director of Snow Aviation International; and Dr. Jacqueline Collamore, a Chevy Chase, Md., corporate consultant. EST