BRUSSELS, Belgium — Delhaize America, whose banners include Food Lion and Hannaford, posted an increase in fourth-quarter and full-year revenues as it completed the Food Lion phase roll out during the year.
“Since joining as CEO in November 2013, I have gained a thorough understanding of our Group, of the different markets in which we operate and of our banners. Our Group has strong foundations, with leadership positions in nearly all our markets, a solid balance sheet, and passionate associates. Since the beginning of the year, we continue to have positive momentum at Delhaize America while facing challenges in Belgium and Serbia,” stated Frans Muller, CEO of Delhaize Group. “In 2014, we will further differentiate our offer and support our core banners by focusing on maintaining or strengthening our local leadership positions. We will pursue operational efficiencies and exercise continued capital discipline in order to fund this.”
For the quarter, revenues at Delhaize America increased by 2.8% to $4.3 billion. Comparable store sales growth was 2.8% despite retail inflation turning negative (-0.4%) as a result of additional price investments due to the launch of Phase 4 in the second quarter and Phase 5 in November at Food Lion and an overall low inflationary environment, the company stated.
Underlying operating profit decreased by 14.1% to $128 million due to a lower gross margin resulting from price investments and due to higher SG&A. Underlying operating margin for the quarter was 3.0% compared to 3.6% in 2012.
For 2013, U.S. operations generated revenues of $17.1 billion, an increase of 1.9% compared with 2012 in local currency. Comparable store sales increased by 2%. In 2013, Food Lion completed its phase repositioning by implementing Phase 4 in May 2013 (178 stores) and Phase 5 (169 stores) in November 2013.
The U.S. gross margin decreased by 15 basis points to 25.9% as a result of price investments partly offset by improved procurement conditions, at both Food Lion and Hannaford.
Selling, general and administrative expenses as a percentage of revenues increased by 6 basis points to 22.6% mainly as a result of the reduction of the U.S. bonus in 2012, largely offset by cost savings.
Underlying operating margin of our U.S. business decreased by 29 basis points to 3.7% (4.0% in 2012) as a result of price investments and slightly higher SG&A. Underlying operating profit decreased by 5.3% to $639 million (€481 million). Operating margin was 3.4% mainly as a result of $53 million (€40 million) reorganization, fixed asset impairment charges and store closing expenses.
In separate company news, the Belgian international food retailer had announced the appointment of Marc Croonen as chief human resources officer of Delhaize Group. Croonen, formerly human resources director of International Paper for Europe, Middle East, and Africa, will also become a member of the Delhaize Group executive committee.
He will start effective May 1, 2014 and lead the Group’s HR, sustainability, and internal communications functions, succeeding Nicolas Hollanders who is leaving the company. The IT functions that had been reporting to Hollanders will now report to Pierre Bouchut, the Group CFO.
In addition, Dirk Van den Berghe, CEO of Delhaize Belgium and Luxembourg, has been appointed to the Delhaize Group executive committee.