Food Lion boosts Delhaize’s second quarter results
Published 12:00 am Sunday, August 10, 2014
SALISBURY — Good momentum at Food Lion helped parent company Delhaize Group post positive results in the United States at the end of the second quarter, but the Brussels-based international food retailer continued to lose ground in Belgium.
Food Lion and Delhaize America are headquartered in Salisbury, where the grocery chain was founded in 1957.
Same store sales in the United States, where Delhaize makes some 60 percent of its business, rose 3.3 percent in the second quarter, ahead of the average 2.5 percent growth expected in a Reuters poll of four analysts.
“Our operating performance in the second quarter was in line with our expectations. In the U.S., comparable store sales growth remained strong, driven by momentum at Food Lion and Hannaford,” President and CEO Frans Muller said. “Our U.S. underlying operating profit began to stabilize as we started to cycle last year’s price investments.”
However, Delhaize took another impairment on its Serbian operations and lost market share in Belgium, Muller said.
Delhaize operates Food Lion, Hannaford and Bottom Dollar supermarkets in the United States. Muller said the growth in sales was driven in part by an increase in retail inflation.
Underlying profits in the U.S. decreased slightly as Delhaize continued to cut prices as part of an ongoing repositioning of the Food Lion brand.
Sales in the U.S. totaled $4.4 billion, an increase of 4.7 percent, marking the seventh consecutive quarter of improved sales at Food Lion.
Muller said the company will begin Food Lion transformations in 77 stores in the Wilmington and Greenville areas. The stores will adopt the “easy, fresh and affordable” strategy launched in 2013 at a Food Lion store in Concord, where sales have jumped 20 percent since the change, Muller said.
Hannaford stores continued to show strong sales momentum in the second quarter, Muller said. Food Lion’s new president, Beth Newlands Campbell, left Hannaford to take over Salisbury’s hometown grocer.
Salisbury-based Bottom Dollar was “very close” to break-even profitability, Muller said. Delhaize is not opening any new Bottom Dollar locations while the company works to improve the banner’s profitability.
For Delhaize as a whole, operating profit fell 11 percent in the second quarter to $238.24 million. In Belgium, comparable sales fell 1.2 percent and the company lost market share.
Delhaize in June announced it would cut 2,500 jobs in Belgium as part of a transformation plan that Muller said coupled with the easy, fresh and affordable initiative at Food Lion is expected to generate “a healthy level of free cash flow.”
Contact reporter Emily Ford at 704-797-4264.