Food Lion 2004 Annual Report Download - page 26

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DELHAIZE GROUP  ANNUAL REPORT 2004
24
In 2004, sales for Delhaize Group’s operations in
Southern and Central Europe grew by 2.2%. In
Greece, Alfa-Beta faced a mid-year slow down
due to traffi c disruptions during the preparations
for the Olympic Games, but began recovering in
the fourth quarter. Delvita continued to face tough
competition. The European operating margin
increased to 1.5%, mainly due to a better sales
mix and continued cost discipline and in spite of
investments in lower prices in Greece, the Czech
Republic and Romania.
Synergies within Delhaize Europe were extended.
In M ay 2004, Delhaize Group’s European opera-
tions launched “ 365,” a new private-label line of
basic products at low prices. “ 365” offers quality
basic products at prices in line w ith hard discount
competit ion. The combination of purchasing pow er
and the effi ciencies in supply chain and packag-
ing resulted in low er cost. The European support
functions were reinforced further.
ALFABETA
“ Attracting the Customer”
After strong sales in the fi rst months of the year,
Alfa-Beta’s sales w ere less robust in the sum-
mer months due to the Olympic Games and price
pressure. Sales recovered in the fourth quarter.
Alfa-Beta’s store network w as extended by ten
new stores, including two company-operated
supermarkets and two City stores.
The company focused on expanding its franchis-
ing netw ork, modeled on Delhaize Belgium’s
experience w ith affi liated stores. Six new Trofo
M arket stores w ere added in 2004. The fran-
chised netw ork allows the company to grow sales
and extend its presence to new geographic areas
without major investments.
Alfa-Beta reinforced its customer appeal by
focusing on assortment, price competitiveness
and service. Particular emphasis was placed on
the enlargement of exclusive product lines such
as regional products under the “ Alfa-Beta close
to Greek Nature” brand, premium-quality perish-
ables labeled “ AB Choice” and the organic “ Green
Leaf” non-food range. The “ 365” brand w as intro-
duced with more than 100 items at year-end.
The company enhanced the quality and range
of its bakery and meat departments. In addition,
supply chain, staffi ng and marketing were thor-
oughly evaluated and modifi ed. Customer reac-
SOUTHERN AND
CENTRAL EUROPE
Launched “ 365” basic product
range in all European companies
Focused development in fresh
departments
Implemented new initiatives to
increase effi ciency
Rolled out City store format in all
countries
Reinforced European support
functions
2004
HIGHLIGHTS
C
h
ange
2004
2003
N
umber o
f
stores
+
1
1
2
53
24
2
S
ales
*
+
2.2% 1,
22
5.7 1,1
99
.
0
Operating margin
+
19
bp
s
1
.5
%
1.3
%
Operatin
g
profit*
+
17.5% 17.
8
15.
2
N
et earnings
*
+
90.0
%
(
1.1
)
(10.7
)
*
in millions of EU
R