SALISBURY — Thanks to Food Lion, Belgian retailer Delhaize experienced strong sales growth in the United States in January, February and March, but a slowdown in Belgian operations kept the company’s revenue increase slightly lower than expected.
Delhaize President and CEO Frans Muller attributed 2014 first-quarter growth in U.S. stores primarily to the “continued momentum at Food Lion,” which is headquartered in Salisbury.
Overall, Delhaize first-quarter results show an increase in revenue of 2.8 percent, with comparable store sales growth of 4.6 percent in the U.S. and a nearly 1 percent drop in Belgium.
Delhaize makes more than half of its revenues in the U.S., where it operates Food Lion, Hannaford and Bottom Dollar Food. During the first quarter, stores that have been open for at least a year saw sales increase by 4.6 percent. As a whole, Delhaize operating profit fell 5.7 percent to $217.35 million.
In the United States, profits fell by 8.2 percent as a result of price cuts and costs related to unusually difficult winter weather conditions.
In the Belgian market, Delhaize competes with German discounters Aldi and Lidl, as well as Belgian group Colruyt and France’s Carrefour. Dutch supermarket group Ahold has started to expand in the country.
“Our first quarter shows a mixed performance, with very strong revenues in the U.S. but disappointing results in Belgium,” Muller said in a news release.
In the U.S. as expected, cutting prices coupled with an increase in commodity costs impacted the profit margin, he said.
“While we continued to face challenges in Serbia, we achieved comparable store sales growth and further market share gains in Greece and Romania,” Muller said.
He reiterated that for 2014, capital expenditures will increase to roughly $860 million and Delhaize plans to open 180 stores.
“We also intend to continue to generate a healthy level of free cash flow,” Muller said.
Contact reporter Emily Ford at 704-797-4264.