Price competitiion weakens grocer Delhaize Group - The Packer

Price competitiion weakens grocer Delhaize Group

03/10/2011 03:11:34 PM
Bruce Blythe

Delhaize Group SA said comparable-store sales at Food Lion and the five other U.S. grocery chains it owns weakened further last year amid “intense” price competition and restrained consumer spending.

Comparable-store sales in the U.S. fell 2% in 2010 following a 0.4% decline in 2009, Belgium-based Delhaize said in a March 10 statement.

The decline reflected “prudent consumer spending and a competitive environment which stayed very promotional, especially in the second quarter,” Delhaize said. “Competitive activity was intense” during the fourth quarter, though similar to the previous quarter, the company said.

Like many supermarket chains, Delhaize over the past year cut prices for many items, aiming to boost traffic in a sluggish economy and keep pace with aggressive discounting by Wal-Mart Stores Inc. Delhaize also opened 16 new Bottom Dollar Food discount stores in the U.S.

“During the year we improved our price competitiveness, successfully managed our operating expenses, stepped up our growth in our newer operations and maintained our solid operating margin,” Pierre-Olivier Beckers, Delhaize’ chief executive officer, said in the statement.

Delhaize added U.S. stores in 2010 and noted an “encouraging” sales volume trend at Food Lion during the second half of the year. U.S. comparable-store sales declined 0.8% in the fourth quarter compared to the same period in 2009, Delhaize said. By comparison, third-quarter sales fell 1.8%.

At the end of 2010, Delhaize had 1,627 U.S. stores, a net increase of 20 from a year earlier. U.S. operations include more than 1,100 Food Lion stores, which are mostly located in the Southeast. Delhaize also operates Harveys, Hannaford Bros., and Sweet-bay chains in the U.S.

Delhaize also remodeled or expanded 72 existing stores in Greenville, N.C., Richmond, Va. and elsewhere in 2010. In 2011, Delhaize plans to remodel stores in three U.S. markets, including Roanoke, Va. The company didn’t identify the other markets.

Food Lion and other U.S. operations “made important price investments” since the start of 2010, Delhaize said in the statement, and “managed to improve underlying volume trends in the second half of the year.”

U.S. stores generated about $18.8 billion revenue in 2010, down 1% from 2009, Delhaize said. The U.S. accounts for about two-thirds of Delhaize’s global revenue.



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