BELGIUM: Delhaize pricing policy targets increased volumes
Belgium-based supermarket group Delhaize has said that it believes its policy of lowering prices and strengthening its private-label offering will help grow sales volumes, despite the poor economic climate in Europe and the US.
"By offering value we have won more customers. We believe that by following this policy and remaining highly competitive in terms of price we can continue in this trend," a spokesperson for the company told just-food after the group issued its first-half results today (4 August).
During the first half of the fiscal year, Delhaize saw comparable sales growth of 2.2% in the US and 1.3% in Belgium. At identical exchange rates, the company posted first-half revenue growth of 3.7%.
However, currency exchange weighed on the company's results, particularly in the second quarter when sales fell 7.5% to EUR4.45bn (US$6.93bn). In the first half, revenue dropped a total of 6% to EUR9bn.
"In the second quarter of 2008 our revenues grew at a rate that is reflective of the current economic environment with consumers' purchasing power under pressure," Delhaize president and CEO Pierre-Olivier Beckers said.
Beckers said that, given the current economic climate and increasing competitive pressures, the retailer would remain focused on keeping prices low. However, he added, Delhaize will look to offset this cost against organisational savings.
"We are committed to fund price investments and offset underlying cost pressures through major savings initiatives that will have a lasting effect on our organisation," he said.
Net profit from continuing operations amounted to EUR218.7m, a 26.4% increase on the first half of last year. In the second quarter, net profit increased 43%. This, Delhaize told just-food, was primarily the result of this year's lower tax rate and costs associated with buy-back debt incurred in the comparable period of last year.
Looking to the full year, Delhaize lowered its sales forecast from 4-5.5% to 3-4.5% in Belgium and from 2.5-3.5% to 1.5-2.5% in the US - where the group generates 70% of sales.
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