Food Lion 2010 Annual Report Download - page 49

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Delhaize Group - Annual Report 2010 45
Market Environment
After contracting 2.9% in 2009, the Greek economy did not improve
in 2010. Gross domestic product declined with 4.8% making it one of
the worst performances in decades. At the end of the third quarter,
economic activity reached a record low. Unemployment figures
continued to increase and reached 12.4% at the end of the year, the
highest level since the first quarter of 2000. Consumer confidence
was heavily impacted. In order to get access to an IMF lending
facility to support public finances, a draconian austerity package
was implemented in 2010. The prospects of falling real wages and
higher taxes resulted in a decrease of public consumption of 4.3%.
Strategy
Alfa Beta operates a rapidly growing multi-format store network,
including supermarkets, proximity stores and cash and carry
stores. The stores offer a large assortment, including fresh and
organic products and local specialties. Alfa Beta is known for its
modern facilities, high quality service and convenience. Initially
focused on the capital of Athens and the surrounding province,
Alfa Beta has recently expanded into other areas of the country
through a combination of organic and external growth. Through
the conversion of 2 existing stores, Delhaize Group also introduced
the low cost format Red Market in Greece.
Network
At the end of 2010, Alfa Beta operated 223 stores or 7 more than in
2009. Network expansion included the opening of the green store
located in Stamata. Alfa Beta strengthened its position in Northern
Greece with 2 new locations; the conversion of 8 stores acquired
in the previous year and another 13 stores. Within the banner
portfolio some shifts were made to better respond to regional and
demographical elements. In 2010, the two Lion Food stores were
converted to Red Market.
To support the store network, Alfa Beta invested in a new
distribution center of 30 000 m², centralizing cold chilled products
like dairy, poultry, fish, eggs, fresh juice and deli. Voice picking
technology was introduced in distribution centers for certain
product categories and will be further rolled out in 2011.
Financial Results
Despite the difficult market environment Alfa Beta realized strong
revenue growth. Revenues came out at keep EUR 1.6 billion
together, an increase of 6.3% compared to 2009. Consumers
have become more price conscious, focusing more on cheaper
alternatives even within private label brands. The
Fthinopoli
promotion campaign at the end of the year gave sales an extra
boost and helped Alfa Beta to reach a higher market share of
18.4%. (Source: AC Nielsen).
Private brand sales demonstrated growth versus last year of 18%
bringing its contribution in total retail sales at 17.5%.
Alfa Beta realized a gross margin of 24.3% in 2010, compared to
23.8% the year before. This was to a large extent the result of better
supplier terms. Selling, general and administrative expenses
increased with 23 basis points to a level of 20.4% of revenues. As
a result, the operating margin of Alfa Beta remained stable at
4.0% of revenues in 2010. In combination with higher revenues this
resulted in a 6.9% higher operating profit.
Alfa Beta’s total capital expenditures at the end of 2010 came out
at EUR 75 million, compared to EUR 57 million in prior year.
DELHAIZE GROUP
AT A GLANCE OUR
STRATEGY OUR ACTIVITIES
IN 2010 CORPORATE
GOVERNANCE STATEMENT RISK
FACTORS FINANCIAL
STATEMENTS SHAREHOLDER
INFORMATION
> FINANCIAL REVIEW > BUSINESS REVIEW > United States > Belgium > Greece > Rest of the World
As of December 31, 2010
Stores 157 (+5) 16 (+3) 18 (-2) 19 11 (+1) 2
Area
Company-
operated
supermarkets
Company-
operated urban
convenience
store
Affiliated
convenience
store
Affiliated
convenience
store
Cash & carry
stores Company-
operated
low-cost
supermarkets
Average surface
(sq.m.)
1 253 440 220 510 2 368 950
Number of
products
13 300 4 150 4 250 6 750 8 200 3 000
market share
for Alfa Beta
18.4%
2010 2009 Change
Number of stores
223 216 7
Revenues
(1)
1 563 1 471 6.3%
Operating profit
(1)
63 59 6.9%
Operating margin
4.0% 4.0% +2bps
Capital
expenditures
(1)
75 57 31.8%
Number
of associates
9 857 9 586 271
(1)
In millions of EUR