Delhaize 2001 Core Profit Rises, 2002 in the Hot Seat

Feb 20, 2002

According to Reuters, Delhaize is expected to report a more than 20 percent rise in 2001 core profits this week after earlier this month posting strong sales growth, thanks to acquisitions and its growing U.S. business, analysts say. But the Belgian food retailer will be watched closely for any guidance it might give for 2002 after same-store sales fell in the fourth quarter of last year, they add. ING Barings analyst Maud Watelet said she wanted to know how Delhaize was coping with the economic slowdown, especially in the United States where it does most of its business. Watelet expected 2002 sales to drop to 21 billion euros from 21.4 billion euros amid slowing tourism in Florida — a key market for U.S. unit, Delhaize America — the U.S. recession, and increasing competition from other retailers like Kroger.

Analysts, however, see signs that retail sales in the United States are picking
up. Delhaize derives some 70 percent or more of its revenues from its U.S. chains
like Food Lion, Hannaford and Kash n Karry chains. They also saw Delhaize holding
its ground in its Belgian home market against French rival Carrefour, a new
entrant. Carrefour has been cutting prices at the GB supermarket chain after
buying it from retail group GIB in 2000.

Moderator Comment: Which of the Delhaize America store
brand formats offer the company the biggest opportunity for growth?

An improving economy should help Delhaize America but
the chain faces stiff competition from New England to Florida. [George
Anderson – Moderator

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