Delhaize Climbs as Food Lion Boosts Volumes: Brussels Mover

Delhaize Group SA gained as much as 10 percent in Brussels trading as the brand repositioning at Food Lion supermarkets, its biggest U.S. banner, boosted sales volumes.

Delhaize shares gained as much as 3.25 euros to 35.20 euros, the highest since Aug. 22. The stock, the best-performing in Belgium’s benchmark Bel20 Index this year, traded at 34.54 euros, or 8.1 percent higher, at 11:44 a.m. local time.

The repositioned Food Lion outlets generated sales and volume growth in the fourth quarter on a comparable-store basis. Further price cuts at Hannaford and the expansion of Bottom Dollar Food helped volume at those banners, the company said today in a statement.

Pascale Weber, an analyst at KBC Securities in Brussels, said in a note to clients that she was “positively surprised by the significant improvement at the repositioned Food Lion stores.” Weber recommends investors buy the stock.

Group revenue for the three months ended Dec. 31 increased 2.3 percent to 5.76 billion euros ($7.66 billion), in line with the 5.79 billion-euro average of seven analyst estimates compiled by Bloomberg. Excluding currency translation effects, revenue rose 0.3 percent.

Underlying operating profit for the full year fell about 17.5 percent, in the middle of its own forecast of a drop of 15 percent to 20 percent, the company said. Delhaize had said it expected the 2012 decline “at the bottom-end” of that range.

Store Closings

The company said it will incur about 390 million euros in one-time charges, mostly due to impairments at Belgrade-based Maxi. The charges include writedowns at its Albanian operations, which the company has an agreement to sell this year. About 300 million euros of the charges will be booked in the fourth quarter and about 90 million euros in the first quarter.

The charges include 130 million euros for store closings including 34 stores at Sweetbay and 15 million euros in management settlement costs. The announced store closings will boost profit by 30 million euros this year, Chief Financial Officer Pierre Bouchut said today on a conference call.

“We remain determined to accelerate the transformation of our business,” Chief Executive Officer Pierre-Olivier Beckers said in the statement. “In 2013, our focus will be on further strengthening our store brands, accelerating revenue growth, maintaining strict cost control and generating free cash flow.”

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