Delhaize America Posts Higher Q1 Revenues, Comps

Delhaize Group reported that U.S. revenues increased 3.2 percent to $4.4 billion in fiscal Q1, backed by comparable-store sales growth of 2.5 percent. The company credited the growth in comps to the strong performance at both Food Lion and Hannaford, aided by severe winter weather comparable to last year. Retail inflation, which stood at 1.2 percent for the quarter, fell progressively from the beginning of the year, driven primarily by dairy and produce price decreases.

Overall, Delhaize Group reported Q1 revenue growth of 15.8 percent; gross margin was 24.4 percent of revenues and nearly flat at identical exchange rates, due to higher price investments and promotions in Belgium, offset by better supplier terms in southeastern Europe and, to a certain extent, in the United States.

Delhaize Group President and CEO Frans Muller called Delhaize America's revenues "resilient," adding, "At Food Lion, we are on track with the rollout of our 'Easy, Fresh & Affordable' strategic initiative in an additional 160 stores."

Underlying operating profit rose by 4.4 percent at actual exchange rates, but dropped 11.2 percent at identical exchange rates. The Brussels-based retail conglomerate attributed the decline to Delhaize Belgium's lower sales and higher price investments, promotions and advertising costs as it sought to "invest to regain the customers we have lost during the disruptions caused by the uncertainty around the [company's] Transformation Plan" to increase efficiency and lower costs.

Affirmed Muller: "Our focus for the group is unchanged: Continue to grow sales and improve market share in our core markets, funded by operational efficiencies and continued capital discipline as reflected by S&P’s recent decision to change our Outlook from 'Stable' to 'Positive.'"