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BRUSSELS, Belgium - Delhaize Group here, operator of Food Lion, Kash n' Karry, Hannaford Bros., and Harvey's supermarkets in the United States, reported an organic sales growth of 2.4 percent for 2003. However, total sales decreased by 9.0 percent to 18.8 billion euros, due to the weakening of the U.S. dollar by 16.4 percent against the euro.
The company said sales were positively affected by improving sales momentum at Food Lion and Kash n' Karry, resulting in a comparable-store sales growth of 0.6 percent for its U.S. operations. In 2003 the contribution of the operations in the United States to the sales of Delhaize Group amounted to $15.5 billion (13.7 billion euros), an increase of 3.5 percent over 2002. While sales continued to be strong at Hannaford during 2003, the sales trend at Food Lion and Kash n' Karry gained momentum throughout the year. All U.S. companies realized positive comparable-store sales growth in the second half of the year. U.S. sales of Delhaize Group were also influenced by the closing of 42 stores in the first quarter, the acquisition of 43 Harveys stores in the fourth quarter, and a 53rd sales week compared with 52 weeks in the prior fiscal year ($308.6 million in additional sales).
In 2003, Delhaize Group opened or acquired 79 stores in the United States, including three relocated stores, and closed 46 stores, resulting in a net increase of 30 stores, for a total of 1,515 stores. In addition, Delhaize America remodeled or expanded 94 supermarkets. The remodelings included 68 Food Lion stores in the Raleigh, N.C. market, the first time Food Lion has undertaken a complete market remodeling program.
In 2004, Delhaize Group expects to open 58 new supermarkets in the United States, including seven relocated stores. Delhaize Group plans to close 45 stores in the United States, resulting in a net increase of six stores, for a total number at the end of 2004 of 1,521 stores. The numbers of store openings and closings include 10 Food Lion stores that will be temporarily closed to be converted and reopened under the Harveys brand.
Additionally, 111 existing stores will be remodeled and/or expanded. The successful focused market-remodeling program that Food Lion has undertaken in 2003 in the Raleigh, N.C. market has led Food Lion to identify the Charlotte, N.C. market for a second focused remodeling of a complete market in 2004. Charlotte is the second most important Food Lion market in sales.
As previously announced, 34 of the 45 stores to be closed were Kash n' Karry stores that were shuttered before the end of February. The 34 store closings are part of a strategy at Kash n' Karry to refocus on its core positions on the west coast of Florida, where it will open or remodel 20 stores, mostly in the Ft. Myers/Naples market, in 2004. As part of the new strategy, Kash n' Karry will be rebranded over the coming three years to the new banner name "Sweetbay Supermarkets," to communicate the changes more dynamically to Florida customers.
Exceptional after-tax expenses in the range of approximately $88 million will be recorded in the first quarter of 2004, related to the closing of the Kash n' Karry stores and the rebranding of the business.