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  1. Analysis
May 8, 2013

What the analysts say – Delhaize CEO departure, Q1 results

In two separate announcements this morning (8 May), Belgian retailer Delhaize Group revealed its CEO Pierre-Olivier Beckers is to retire at the end of the year and that it had returned to profit in the first quarter. Analysts gave a mixed view of the announcements.

In two separate announcements this morning (8 May), Belgian retailer Delhaize Group revealed its CEO Pierre-Olivier Beckers is to retire at the end of the year and that it had returned to profit in the first quarter. Analysts gave a mixed view of the announcements.

Citi Research analyst Alastair Johnston

“Clearly the incremental news today concerns the CEO succession as this brings with it the risk that operational strategy will shift over the coming two years. The quarter was strong: while the underlying momentum looks satisfactory, it should be acknowledged that weather conditions were favourable. Looking forward, the next phase of Food Lion renewals will provide a headwind to gross margin development.

“Delhaize faces the following industry and company-specific risks. The biggest downside risk is that the US grocery sector turns down, perhaps in a post-election period of austerity. Dollar risk is always a factor when looking at Delhaize. In Belgium, pressure from discounters (which represent 40% of the market) is an everpresent downside risk: the entry of Ahold into the Belgian market is also a potential risk as it seeks to occupy the same small but full-range supermarket space in the market.”

Petercam analyst Fernand de Boer

“Not much news from the results side. However, we are very pleased by the comments made in the conference call that all three phases [of Food Lion repositioning] continued the positive momentum with comparable sales growth in excess of 3%. This implies that the phase 1 stores, which were repositioned two years ago are still going solid which creates confidence for the total repositioning programme.

“The step down of Beckers does not come as a surprise and seems a logical next step in the reshape of the company. Although in the call, the company stated that his successor could be an internal or external candidate, we expect Delhaize to seek an outsider with a broad continental experience to bring Delhaize to the next level.”

Rabobank analyst Patrick Roquas

“We see a substantial chance that Mr Beckers will be succeeded by an internal candidate (like the current CFO). Initial comments made by the company regarding the reasons behind Mr Beckers departure, include that he has been at the helm of Delhaize for 15 years and that there are still a number of tough decisions that need to be made. We believe that the upcoming change of CEO confirms the determination of the boards at Delhaize regarding the restructuring of the company.

“The departure of Mr Beckers might therefore fuel speculation about a potential split between the US and Europe in the future, especially in case the US business does not show a complete turnaround/recovery. Although we do not assume such a scenario at this stage, we believe it should not be ruled out either and in which case there would be substantial upside in our SP.”

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