Food Lion parent accelerates U.S. openings

01/25/2011 08:43:33 AM
Bruce Blythe

(UPDATED COVERAGE, 11:55 a.m.) Delhaize Group SA, the Belgium-based owner of Food Lion and five other U.S. grocery chains, plans to spend about $1.2 billion to open as many as 130 new stores globally this year, saying sales trends are improving.

The company expects to step up expansion of newer formats, including its Bottom Dollar Food discount stores, Delhaize said in a quarterly financial statement released Jan. 20. Delhaize currently has 28 Bottom Dollar stores in Maryland, North Carolina and Virginia.

At Food Lion, the company’s largest U.S. chain, the company saw “a continuation of the encouraging trends” from the previous quarter, Pierre-Olivier Beckers, Delhaize’s chief executive officer, said in the statement. Food Lion has 1,627 stores, primarily in the Southeast.

As the company expands further in 2011, “our brands will continue to benefit from the many sales-building initiatives,” including discounts and private label products, he said. “We are confident that the many initiatives... will allow us to achieve faster growth in the coming years.”

Delhaize didn’t specify where it plans to open new stores. The company will provide details on new store openings in its full-year financial report scheduled for release March 10, Delhaize spokeswoman Amy Shue said.

The company generated more than two-thirds of its 2010 revenue, which totaled about $28 billion, from U.S. stores, according to the statement.

Delhaize is among many food retailers increasingly emphasizing discount formats amid high U.S. unemployment and the economy’s slow recovery from the 2008-09 recession.

Last spring, Food Lion launched a new “Low Price Heritage” advertising campaign to further promote price reductions on thousands of products. In February, Food Lion started a “New, Lower Prices” program, cutting prices on fresh produce, milk, meat and other products.

U.S. consumers continued to spend cautiously last year, Delhaize said.

“As in 2009, consumer spending remained prudent in 2010 and the competitive environment was promotional,” Delhaize said in the statement. “In the second half of the year, our U.S. operations managed to improve underlying volume trends as a result of the price investments made earlier in the year and targeted promotional offers at Food Lion.”

During the fourth quarter, Delhaize’s U.S. operations posted a 0.8% decline in comparable store sales compared with the same period a year earlier. In the third quarter, sales fell 1.8%.

Total fourth-quarter sales in the U.S. were $4.72 billion, up 0.1% from the year-earlier period, Delhaize said.

Delhaize said it also plans to close 20 stores this year, meaning the company will have a net addition of 100 to 110 stores. In 2010, Delhaize had a net addition of 68 stores. Delhaize also operates Harveys, Hannaford Bros., and Sweetbay chains in the U.S.



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