The CEO of Delhaize today (5 August) highlighted the steps the retailer was taking to improve operations after it booked a fall in first-half profits.
Pierre-Olivier Beckers emphasised how Delhaize’s second-quarter revenues accelerated in all of its operating segments, which he attributed to the Belgium-based retailer “harvesting the steadfast benefits” of its strategy, dubbed New Game Plan.
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The Delhaize chief said the company’s strategy was paying off “in an environment that continues to face high unemployment rates and low consumer confidence”.
Beckers also explained how the EUR932.5m acquisition of Serbian retailer Delta Maxi, which was completed this week would contribute to the development of one of the pillars of the strategy – enhancing Delhaize’s platform for growth.
“Now we’re officially at the wheel, we can start the integration process and align Delta Maxi’s operations within the game plan. The acquisition of Delta Maxi allows us to accelerate revenue growth in south eastern Europe is a significant step in rebalancing our group portfolio towards high growth markets,” he said.
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Beckers outlined how Delhaize is looking to improve its performance in the US, where its operating profit fell 8.2% in the the first half of 2011 to reach US$421m.
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By GlobalDataThe company has begun what it described as “brand reinforcement work” in 200 Food Lion stores in and around Raleigh and Chattanooga, an initiative it announced on May.
After the first three months of roll out, Beckers said the KPIs from the programme “look predominantly good”. He said consumer feedback suggests that consumers think “Food Lion is on the right track” and that the changes are “being noted and appreciated”.
Beckers also said that comparable-store sales in those 200 stores reported higher comparable store sales, with more transactions and larger basket sizes. “Clearly we are pulling the right levers and are going in the right direction,” added Beckers.
The company plans to decide how it will roll out the concept to the rest of its network by the end of the year.
However, commenting on the company’s results, J.P. Morgan Cazenove analyst Paul Diamond described the results as “a weak set of second-quarter results in margin terms”, which fell over the half to 4.3% of revenues, down from 4.6% last year.
Diamond suggested that margin pressure is set to ensure in the coming 18 months as the company is “forced to continue to invest in price, whilst simultaneously remodeling the Food Lion business”.
Shares in the company were down 4.27% to EUR45.02 at 16:45 CET today.
