Shares in Delhaize, the Belgium-based retailer, slumped today (18 July) after the company cut its sales and earnings forecasts for 2008 due to declining consumer confidence on both sides of the Atlantic.

The company, which operates the Food Lion and Hannaford chains in the US, said today it now expects annual operating profit to between flat and up 3% for this year. This revised forecast compares to earlier guidance of 6-8%.

Full-year sales are now expected to rise by 3-4.5%, Delhaize said, down from a previous forecast of 4-5.5%.

Same-store sales in the US will also be lower than the company's previous forecasts with Delhaize now predicting they will grow by 1.5-2.5%, down from earlier guidance of 2.5-3.5%.

Shares in Delhaize on the Euronext Brussels stock exchange had tumbled 16.7% to EUR33.32 by 11:23 CET this morning. 

Delhaize blamed higher fuel and food prices in the US and Europe and said shoppers are trading down and buying less when they visit the company's stores.

President and CEO Pierre-Olivier Beckers said the company would look to lower prices in a bid to boost sales but would also look to cut costs to support margins. The company has already earmarked EUR60m (US$95.2m) in cost-savings from transport, warehousing and other activities.

"While the current environment requires us to address short-term market challenges, we remain focused on our long-term strategic commitments. We are implementing sustainable gross margin and cost-cutting measures to reinvest in our business and protect our bottom line," Beckers said.

The cut in the annual forecasts meant Delhaize also issued revised guidance for its second-quarter results, which are due to be published on 4 August.

Delhaize said it expects operating profit to be down 22% on the year to around EUR194m, although that fall is also due to integration costs linked to an acquisition in Greece and the sale of Di.

Underlying operating profit is expected to be down 7.9%, Delhaize said.

Stripping out the effect of exchange rate fluctuations, revenue for the second quarter is forecast to be down 2.6%. Same-store sales in the US are expected to be up 1.9% and 0.7% in Belgium.