US concerns prompt rethink from Delhaize
of the Food Lion and Kash n' Karry chains run by Belgium's Delhaize
group, prompting the company to revise its full-year growth
forecasts.
Ongoing concerns about the weakness of the US market have prompted Belgian retail group Delhaize to revise its predictions for full year results. The company is now predicting a 1-2 per cent decline in sales compared to the previous year.
"While most of the operations in Europe and Asia and the Hannaford banner in the US performed as expected during the summer months, the two other US banners of the Delhaize group - Food Lion and Kash n' Karry - trended lower than anticipated in July, August and early September," the company said in a statement.
"Both banners, operating in areas that have been particularly hit by economic softness and aggressive competition, have invested to retain market share and customer loyalty, but their sales results have been negative on a comparable store basis. Delhaize currently expects US comparable store sales growth in 2002 to be between 0.5 and 1.0 per cent lower than the previous year."
Pierre-Olivier Beckers, president and chief executive officer of Delhaize, said: "Delhaize is a healthy and resilient company and its management is fully focused on its challenges. We will continue our ongoing process to improve our operations to generate consistent sales and earnings growth in the future, especially at Food Lion and Kash n' Karry."
Beckers said he was confident of a turnaround at Food Lion, which continued to strengthen its competitive position through price leadership and enhancing its customers' shopping experience in fresh products, service and convenience. He said feedback form consumers had shown an improvement in the fascia's image with regard to its fresh food image and customer service, and that the programme of new store development would continue.
He confirmed that operations in Europe had accelerated their sales growth in the third quarter versus the first half of 2002. Delhaize Belgium in particular had improved its sales growth rate and its profit progression and maintained its market share position thanks to a new commercial policy implemented in January 2002 which helped gain positive momentum.
While the new sales and profit projections were hardly satisfactory, Beckers said that he believed Delhaize would "weather the storm and will keep building a prosperous future on the basis of its underlying strengths".
Delhaize operates nearly 2,500 stores in 10 countries on three continents.
