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BRUSSELS, Belgium - A weakened dollar hurt results for the Delhaize Group in its fourth quarter, the retailer here said yesterday. Net sales for the quarter amounted to EUR 4.8 billion ($6.279 billion) -- a decrease of 1.0 percent compared to 2005. At identical exchange rates, however, revenue would have grown by 4.6 percent, supported by strong comparable store sales growth of 2.2 percent in the U.S., and 2.7 percent in Belgium and a continued high performance in Greece.
"In the fourth quarter of 2006, our operating companies were able to sustain the strong sales momentum of the first nine months of the year," said Pierre-Olivier Beckers, president and c.e.o. of Delhaize Group, in a statement. "Consequently, Delhaize Group sales growth for the full year came out at the top end of our expectations, and our 2006 performance marks the fourth consecutive year of accelerating sales momentum.
Beckers noted in particular the strong performances of Food Lion and Hannaford in the U.S., Delhaize Belgium, and Alfa-Beta, Delhaize's Greek company.
"Our store opening program and other planned initiatives for 2007 leave us confident that we will continue our profitable growth in 2007," he said.
For the full year, Delhaize Group achieved net sales and other revenues of EUR 19.2 billion compared to EUR 18.3 billion the prior year, an increase of 4.8 percent. Net sales and other revenues grew by 5.5 percent at identical exchange rates, at the top end of the company's guidance range of 4.5 percent to 5.5 percent for sales growth in 2006.
In 2006, the contribution of the U.S. operations was $17.3 billion, an increase of 4.4 percent over 2005. Comparable store sales increased by 2.7 percent.
In the fourth quarter, the net sales and other revenues contribution of Delhaize U.S. was $4.4 billion, an increase of 3.8 percent compared to 2005. Comparable store sales grew by 2.2 percent, despite a high comparison basis (2.5 percent growth in the fourth quarter of 2005).
The company said that fourth quarter sales were supported by strong performance from Food Lion, due to disciplined execution in the stores supporting comparable store sales growth in all operating divisions; effective price, promotion, and marketing initiatives; and the success of the market renewal program.
In line with the performance of the company since the second quarter, sales momentum at Hannaford continued to be strong, supported by its competitive pricing and recent store openings.
Sales at Sweetbay were negatively impacted by the chain's intensive remodeling activity, and sales weakness at the non-converted Kash n' Karry stores, the company said.
In 2007, Delhaize Group expects to open approximately 47 new supermarkets in the U.S. In addition, the company plans to close approximately 10 stores to be relocated and 14 other stores. This will result in a net increase of 23 stores to a total number of 1,572 stores at the end of 2007.
Approximately 207 U.S. stores will be remodeled in 2007. Food Lion will remodel 142 stores as part of its market and store renewal programs. All remaining 30 Kash n' Karry stores will be re-launched under the Sweetbay Supermarket brand before the end of September 2007.