Delhaize hit by dollar dip
dollar, took their toll on 2002 results at Belgian retailer
Delhaize. A major refit and cost reduction programme in the US
should lead to an improvement this year, however.
A decline in the value of the US dollar pushed down sales at Belgian retail group Delhaize in 2002. The company operates under a number of fascias in the US, and saw its sales decline by 3.3 per cent to €20.7 billion when converted into the European currency.
The company did manage to increase its profits, however, posting a 19.3 per cent increase to €178.3 million, and posted a modest (2.1 per cent) rise in organic sales.
Delhaize preferred to put a positive spin on its performance in 2002, highlighting its efforts to stem declining sales at US units Food Lion and Kash n' Karry, as well as strong performances from another USA unit, Hannaford, its domestic Delhaize business and Alfa-Beta in Greece.
Pierre-Olivier Beckers, president and chief executive officer of the Delhaize Group, said that the company's performance in 2003 would be better: "We have identified $100 million cost savings at Food Lion to further strengthen our competitiveness and to protect our profitability. Delhaize Group is also actively implementing measures in its other banners to continue to generate significant free cash flow."
Despite the problems in the US, Delhaize America contributed $15 billion to total Delhaize group sales, an increase of 0.9 per cent over the pervious year. But the current year will see exceptional charges of $41 million relating to job cuts and store closures at the troubled US unit.
Delhaize Belgium sales grew by 6.5 per cent thanks to the expansion of the network by 32 stores and comparable store sales growth of 3.7 per cent. The company's market share in Belgium increased from 24.6 to 24.8 per cent.
Sales from the Southern and Central European operations of Delhaize (Greece, Czech Republic, Slovakia and Romania) grew by 6.9 per cent in 2002. In Greece, sales were boosted by the addition of newly acquired Trofo stores, and while there was also a good performance from Alfa-Beta, the Delvita chain continued to struggle at the hands of its competitors.
Delhaize's Asian unit reported sales growth of 16.6 per cent as a result of the addition of 17 supermarkets during the year. At the end of 2002, Delhaize operated 103 supermarkets in Asia, including 34 in Thailand, 34 in Indonesia and 35 in Singapore.
Commenting on the prospects for growth in 2003, Beckers said: "The international economic and competitive environment confronts us with many uncertainties as we enter 2003, but the actions we are taking are vigorous and appropriate to ensuring strong future performance."
He said that sales were expected to grow by 1.5 per cent to 3 per cent at constant exchange rates to €18.8 to 19.1 billion. Profits, on the other hand, should be around €150 to 185 million.
