Belgium-based retailer Delhaize Group said it will accelerate the remodelling of its stores in the US and Belgium after booking a drop in full-year profits.
Net profit in the 12-month period slid 17.5% to EUR475m (US$628.9m), due to EUR127m of impairment charges related to the store revamp it announced in January, the retailer said today (8 March).
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Operating profits dropped to EUR812m from EUR1.02bn in the prior-year, again due to impairment charges in the fourth quarter.
Sales, however, edged up 1.3% to EUR21.12bn, representing an increase of 4.6% at identical exchange rates or 1.3% at actual exchange rates. Sales were boosted by the acquisition of Serbian supermarket chain Delta Maxi and “solid” revenue growth in Southeastern Europe and Asia, the retailer said.
In the fourth quarter, net profits slumped 47.9% to EUR99m, while operating profits dropped 52.1% to EUR147m led by a 20% drop in the US. Sales, however, managed growth of 7.6%, reaching EUR5.65bn in the quarter.
The Belgian supermarket operator is seeking to turn around its US business as its Food Lion stores in the southeast continue to lose ground to rivals. Delhaize said it will close 146 underperforming stores, reposition an additional 600 to 700 Food Lion supermarkets following a successful turnaround in Raleigh, North Carolina and expand into Pennsylvania with Bottom Dollar Food outlets.
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By GlobalData“While soft revenues and costs related to our growth initiatives in the US negatively impacted our fourth quarter results, we are convinced the projects we are focusing on are the right ones for our company,” said president and CEO Pierre-Olivier Beckers.
“Over the course of 2012 we will further improve our price competitiveness in the US and in Belgium, leverage our strong private brands, open more stores, especially in our newer formats and geographies, accelerate our store remodelings in the US and Belgium and focus on delivering value to our customers.”
In its outlook for 2012, Delhaize said it expects its operating margin will continue to be impacted by investment in the US and margin pressure in Southeastern Europe.
