Delhaize Rallies as Pace of U.S. Sales Growth Quickens
Same-store sales growth in the U.S. accelerated to 2.8 percent in the fourth quarter from 2.2 percent in the preceding three-month period even as prices on shelves fell, the Brussels-based company said today in a statement. Revenue of 5.34 billion euros ($7.25 billion) met analyst estimates.
Delhaize’s U.S. performance contrasts with Royal Ahold NV’s message last week of a contracting food market. While lower prices on shelves at Food Lion and Hannaford eroded margins last year, Delhaize said it generated about 670 million euros of cash not required for reinvestment, equal to 13 percent of its current market value. The grocer cut capital spending by 18 percent last year and reassured investors by saying it will remain disciplined in that area.
“Food for thought for the skeptics,” Pascale Weber, an analyst at KBC Securities NV in Brussels, wrote in a note to clients. “A solid set of numbers with revenue and guidance exceeding expectations.”
Delhaize climbed as much as 8.8 percent on Euronext Brussels, the biggest intraday advance since Aug. 8, and traded 3.98 euros higher at 49.67 euros by 10:14 a.m. local time. The stock has advanced 40 percent in the past year, the fourth-best performance in the 15-company Bloomberg Europe Food Retailers Index.
Stripping out currency fluctuations, operating profit excluding some items from continued operations fell less than 2 percent to about 770 million euros last year, Delhaize said. That compares with a 1.2 percent retreat after nine months and with the grocer’s own forecast of at least 755 million euros.
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