BELGIUM: Delhaize FY sales up, announces US closures
Belgium-based retailer Delhaize this morning (16 January) posted a 3.9% rise in annual underlying sales but said it would close seven stores in the US and sell four outlets in Germany this year.
The company booked a 3.9% increase in revenue at identical exchange rates and excluding the impact of an extra selling week and acquisitions.
Reported turnover stood at EUR19bn (US$25.17bn), a rise of 5.6% at identical exchange rates and including the 53rd week in the US. However, when including the impact of the weak dollar against the euro on the results, annual sales inched up 0.4%.
Delhaize pointed to "strong" organic sales growth, which reached 4.2%, thanks to a 2.5% rise in same-store sales in the US, a 2.2% rise in comparable-stores in Belgium and a 13.8% jump in revenue from its Greek operations.
However, the company said a "thorough" review of its portfolio had led to the decision to close seven "underperforming" Sweetbay stores in the US and the sale of four outlets in Germany.
The closures and sell-offs come as Delhaize looks to cut costs and reduce capital spending in 2009. President and CEO Pierre-Olivier Beckers said part of the money saved would be use to invest in the retailer's private-label ranges and to keep the business competitive.
"Our decision to close a number of Sweetbay stores and to divest our four German stores will have a positive effect on our ongoing profitability," Beckers said.
"Despite the uncertain economic environment, we are confident that our many initiatives will continue to deliver benefits in 2009. Special attention will be given to our private-brand offering and price competitiveness."
Beckers added: "To support our revenue growth, our profitability and our cash flows, we have planned a series of actions which will positively impact in 2009 our cost structure by EUR100m. We also plan to partly reinvest a portion of those savings in price. In addition, we plan to exercise discipline by reducing capital expenditures and by generating EUR50m working capital improvements."
During the fourth quarter of 2008, Delhaize saw revenues rise by 4.4% at identical exchanges rates and excluding the 53rd week. Sales were up 10.3% when the extra selling week was included.
Quarterly comparable-store sales growth in the US reached 2.9% and stood at 2.7% in Belgium.
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