grocer Delhaize has raised its guidance for 2013 after beating second-quarter expectations, thanks to further growth in its US operations.During the second quarter, underlying operating profit rose by 5.8% to hit €193 million ($257.06 million), Delhaize said today, Thursday 8 August.
The retailer now expects to make at least €780 million in 2013, more than the €775 million it forecast in May.
Revenues in Belgium were €1.3 billion in the second quarter of 2013, an increase of 2.9% on 2012's result, with comparable store sales growth of 0.8%, according to the retailer. In the second quarter of 2013, revenues in Southeastern Europe increased by 5.3% to €787 million at actual rates (+4.8% at identical exchange rates). The growth was mainly the result of store expansion in Romania and Greece. According to Delhaize, 'Consumer spending continues to be under pressure in what remains a challenging macroeconomic environment'.
In the US, which accounted for about 65% for Delhaize's 2012 revenue, like-for-like sales grew 1.1% and, excluding the impact of the 11 stores closed in February 2013, U.S. revenues increased by 0.8%.
According to Delhaize, this growth was partly brought about by in-store price cuts - thanks to lower wholesale prices - and by a refurbishment program at Food Lion, its largest chain in the US.
“Our Group has delivered solid results for the second quarter. In the U.S., we experienced our third consecutive quarter of positive volume growth. At Food Lion, 178 additional stores were repositioned as part of Phase 4, bringing the total of repositioned stores to almost 80% of the network," Delhaize president and chief executive Pierre-Olivier Beckers said.
He continued, "In Belgium, we are pleased to report market share gains of 35 basis points, mainly resulting from our remodeled stores and network expansion. Southeastern Europe showed further resilience with market share growth in what continues to be a challenging environment"
“In line with our commitment to focusing on areas where we will be able to generate the highest growth and returns, we have reached agreements in recent months to divest Sweetbay, Harveys and Reid’s, as well as our activities in Montenegro.”
“Although we remain prudent on the overall competitive landscape, our operating performance in the first half provides us with confidence that we will be able to generate an underlying operating profit for 2013 of at least €755 million, an improvement compared to our previous guidance.”
At the end of its second quarter, Delhaize had a total of 3455 stores, with 1507 of these in the US, 853 in Belgium and Luxembourg, 366 in Serbia, 279 in Greece and 232 in Romania. The retailer also has stores in Bulgaria, Bosnia & Herzegovina, Albania, Montenegro and Indonesia.
