Delhaize extends US business
have closed as a result of heavy losses, Belgium's Delhaize group
is continuing to expand there. It has acquired the Georgia-based
Harveys group, which is a good geographical fit with its core Food
Lion unit.
The US-based operations of Belgian retailer Delhaize have been one of the principal causes of the company's poor financial performance in recent months, but this has not prevented the group from expanding its business in the North American market.
Delhaize has today announced that it is to buy 43 Harveys supermarkets, located in central and south Georgia and the Tallahassee area of Florida, for $26.1 million (€24.2m) plus a further $18 million in debt.
The aim of the acquisition is to strengthen the European company's Food Lion supermarket chain, one of the retailers hardest hit by the current downturn in US consumer spending. Food Lion's presence in these parts of Georgia and Florida is weak, and the Harveys stores will help plug the gap.
Delhaize also operates under the Hannaford and Kash n' Karry banners in the US.
Last month the Belgian group reported a 13.2 per cent drop in first half sales to €9.2 billion, due mainly to the 19.2 per cent slide in the value of the US dollar compared to the euro and the sale of 42 underperforming stores, most of which were Food Lion outlets.
But Delhaize stressed that the underlying performance from its US business was good, with organic sales growth of 1.6 per cent due to improving sales at Food Lion and Kash n' Karry and the continued strong performance from Hannaford.
The company said it had also introduced a new inventory management system at Food Lion which was expected to lead to significant improvements in margins.
Rick Anicetti, president and CEO of Food Lion and executive vice president of Delhaize, said that the acquisition of Harveys was in line with the company's strategy of "filling in and reinforcing its presence in the company's current geographic footprint".
He stressed that Harveys would continue to operate as a separate organisation, but that it would receive strategic support and assistance from Food Lion. No store closures or layoffs are expected. Most of Harveys' stores are between 18,000 and 35,000 square feet, and seven have an in-store pharmacy.
