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BRUSSELS, Belgium - Global retailer Delhaize Group, parent company of Food Lion, Kash n' Karry/Sweetbay, and Hannaford in the U.S., said yesterday that its U.S. banners experienced strong comparable store sales growth in the fourth quarter and for the year, although its fourth-quarter net profit dipped 2.2 percent to $161.63 million because of the weak dollar.
Meanwhile, the company's c.f.o., Craig Owens, spoke yesterday about speculation that Delhaize was eyeing an Ahold acquisition. In response to a question posed during a news conference, he said the company would find Ahold a better fit without some of its U.S. operations, notably its U.S. Foodservice unit, according to published reports.
The comments apparently helped boost shares in Ahold up more than 4 percent. However, a senior Ahold unionist said yesterday that he was told by Ahold management that there were no talks, and no plans for any merger talks, with Delhaize.
Delhaize chief executive Pierre-Olivier Beckers said earlier during the news conference that the company was more interested in fill-in acquisitions or deals that would help enter adjacent markets.
Beckers noted in a statement that Delhaize's 2006 sales and profits are at the top of the company's expectations. "Sustainable sales momentum at our key banners is the reflection that our strategy is bearing fruit," he said. "Disciplined cost management allowed us to retain our strong operating margins."
Net sales and other revenues in 2006 increased 4.8 percent to $25.418 billion. Organic sales growth amounted to 5 percent, which was a major improvement compared to 2.1 percent in 2005, the company noted. Delhaize attributed the better sales performance to several factors, including the 4.4 percent increase of U.S. sales driven by the strong sales momentum at Food Lion and Hannaford (comparable store sales for the U.S. operations grew by 2.7 percent).
Its net profit from continuing operations for 2006 was up 12.1 percent to $563.4 million.
For the fourth quarter, sales grew 4.6 percent at identical exchange rates, and comparable sales grew 2.2 percent in the U.S.
Looking ahead, Beckers said the company will continue to focus on differentiating while driving down costs. "Our teams continue to implement new initiatives aimed at driving a sales-led culture and pursuing our differentiation strategy, from product and concept innovation to major remodeling activity to an accelerating store opening program," said Beckers. "Our investments in systems, processes and supply chain, and our continued pursuit of executional excellence will support this commitment in 2007."
In related news, Delhaize said yesterday that Michel Eeckhout will become c.e.o. of Delhaize Belgium in July 2007. He will succeed Arthur Goethals, who will retire as planned from his executive roles at the end of June.
Eeckhout is currently c.i.o. of Delhaize Group. He will be replaced in that role by Terry Morgan, currently s.v.p. and c.i.o. at Food Lion, the largest operating company of Delhaize Group.
In addition, the Group announced that, at its ordinary general meeting on May 24, it will propose the renewal of the mandate of three current members of its board of directors: Count Goblet d'Alviella, Robert Murray, and William Roper.