UPDATE: Delhaize Revenue Falls On Weak US Sales, Dollar
May 05 2010 - 4:21AM
Dow Jones News
Supermarket operator Delhaize Group (DELB.BT) Wednesday posted
an expected 2.3% decline in first-quarter revenue on tough price
competition in the U.S. and a weaker dollar, but confirmed its
full-year guidance.
The company posted sales of EUR4.97 billion in the three months
ended March 31 compared with EUR5.09 billion in the same quarter
last year, in line with analysts' estimates, as U.S. sales declined
in value when converted into euros from dollars.
The dollar has declined by 5.8% against the euro when comparing
the two periods. Excluding the impact of currency fluctuations,
sales were up 1.7%.
Sales in the U.S., where Delhaize makes two-thirds of its
revenue, fell by 0.4% as a result of lower food prices.
Delhaize confirmed its outlook for 2010, saying growth would
come mostly during the second half of the year. The Belgium-based
company forecast 7% to 10% growth in operating profit in 2010, at
identical exchange rates, compared with 4.6% growth in 2009.
Net profit for the first quarter rose 2.2% to EUR130 million
from EUR127 million a year earlier, beating analysts' expectations
of EUR124 million and helped by lower taxes in the quarter.
Given the adverse retail market conditions, Delhaize's first
quarter results were "excellent", said bank Degroof's Ivan
Lathouders. The main positive surprise came from sales in Belgium,
but Delhaize's aggressive price cuts in the U.S. to keep up with
local price leader Wal-Mart Inc. (WMT), will likely result in
improved consumer perception and higher sales by the second half of
the year, Lathouders added.
The company, which operates the Food Lion, Hannaford and Sweet
Bay chains in the U.S. and Delhaize supermarkets in Belgium, said
operating profit fell 2.7% to EUR241 million from EUR247 million a
year earlier, beating analysts' forecasts for EUR237 million.
In the U.S. net sales fell to $4.68 billion from $4.69 billion a
year earlier, hit by 1.6% price deflation compared with price
inflation a year earlier.
Quarterly sales in the company's home market of Belgium, where
it competes with Carrefour (CA.FR) and hard discounter Colruyt NV
(COLR.BT), came in stronger than expected totaling EUR1.14 billion
against EUR1.09 billion in 2009. Carrefour is currently
restructuring in Belgium, which has enabled Delhaize to gain market
share. But Delhaize also improved its operating margin, making more
money per product sold in comparison with the first quarter of
2009.
In Greece, where the company operates the Alfa-Beta chain,
first-quarter sales were up 9.2% to EUR378 million from EUR346
million as year earlier, on high comparable store sales growth and
new store openings.
At 0800 GMT Delhaize shares were down 2.2% at EUR61.35, broadly
inline with the Belgian market. The share price has risen 17% since
the beginning of the year as the company has maintained price
competitiveness despite the hard retail environment.
Company Web site: www.delhaize.com
-By Peppi Kiviniemi, Dow Jones Newswires; +3227411483;
peppi.kiviniemi@dowjones.com
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