Food Lion 2011 Annual Report Download - page 31

Download and view the complete annual report

Please find page 31 of the 2011 Food Lion annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 168

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168

Economic conditions were
challenging in 2011, with food
inflation particularly high in
the second half of the year.
In 2011, revenues in the U.S. increased by
2.2% in local currency. Comparable store sales
increased by 0.7%. Economic conditions were
challenging in 2011 especially in the Southeast-
ern U.S., with food inflation particularly high
in the second half of the year. Delhaize Group
ended 2011 with 1 650 supermarkets in the U.S.,
a net increase of 23 stores compared to the
prior year.
In 2011, Delhaize Group re-launched 200 Food
Lion stores located in the Raleigh and Chat-
tanooga markets. This brand strategy work
showed good results, especially in the Raleigh,
North Carolina market. The trends in customer
visits and number of items sold continue to out-
pace the rest of the Food Lion network, result-
ing in positive comparable store sales growth
fueled by the additional price investments in
these stores.
The Bottom Dollar Food stores in Philadel-
phia also recorded excellent revenue growth
and high comparable store sales growth and
strengthened our confidence in the concept. In
early 2012, Bottom Dollar Food entered the Pitts-
burgh, Pennsylvania market and early indica-
tions are positive.
The U.S. gross margin decreased by 33 basis
points to 27.3% as a result of price investments,
especially at Food Lion and inventory losses,
partly offset by procurement savings. In spite of
soft sales and thanks to a continued focus on
cost management, selling, general and admin-
istrative expenses as a percentage of revenues
only increased by 27 basis points to 22.7%.
The operating margin of our U.S. business
decreased to 3.9% mainly as a result of the
impairment charges related to the portfolio
optimization and resulting 126 store closings.
Operating profit decreased by 25.6% to USD
742 million (EUR 534 million).
Total capital expenditures were USD 579 mil-
lion, an increase of 6.6% compared to prior year.
Food Lion
Founded in 1957, Food Lion prides itself on
offering customers a good assortment of qual-
ity products at low prices in clean, convenient
stores. At the end of 2011, Food Lion operated
1 188 stores located in 11 states in the Southeast-
ern United States. In January and February 2012,
Food Lion closed 113 underperforming stores,
most of which were located in markets with the
lowest store density. This portfolio optimization
will enable Food Lion to focus its efforts on the
most promising Food Lion stores and markets.
Bloom
In January 2012, Delhaize America announced
it would close 7 and convert 42 Bloom stores to
Food Lion and retire the banner. This decision
will simplify our business and the converted
stores will benefit from the Food Lion brand
strategy work.
Bottom Dollar Food
Bottom Dollar Food is our soft discount format in
the U.S. At the end of 2011, we operated 57 Bot-
tom Dollar Food stores. The encouraging results
of Bottom Dollar Food in the Philadelphia market
support our expansion plans in additional mar-
kets that present the same growth profile. This
will include a couple of hundred new Bottom
Dollar Food stores over the next five years. To
simplify this growth strategy, at the start of 2012,
we decided to close 6 stores and convert 22
Bottom Dollar Food stores to Food Lion in North
Carolina, Virginia and Maryland.
Harveys
Harveys is a supermarket format focused on
large assortment and fresh products, serving
rural markets in Georgia, South Carolina and
North Florida and possesses strong brand rec-
ognition and customer loyalty. At the end of
2011, Harveys operated 72 stores.
Hannaford
Hannaford is a chain of 179 large stores (most
with pharmacies) offering a large range of high
quality and fresh products. The Hannaford to
Go, the click and collect concept from Delhaize
Belgium, was introduced in two stores and the
results are exceeding expectations.
Sweetbay
Located in Southwest Florida, Sweetbay has a
reputation for quality, price and fresh food. The
banner is also well-known for its strong His-
panic food offering.
DELHAIZE GROUP ANNUAL REPORT ‘11 // 29