Sales up 5.5%; Comparable Store Sales up 1.1%
SALISBURY, NC Delhaize America, Inc. (NYSE: DZA, DZB) announced today that the Company’s sales for the second quarter ended June 17, 2000, were $2.6 billion with earnings of $59 million or $.38 per basic share outstanding. For the first six months of fiscal 2000, sales were $5.1 billion with earnings of $125 million or $.80 per basic share outstanding.
Second quarter sales increased 5.5% over the prior year and comparable store sales were up 1.1%. This compares favorably to first quarter sales trends that showed an increase in sales of 3.0% and a decline in comparable store sales of –1.8%. The Company introduced new promotional campaigns at its Food Lion banner in the second quarter to improve sales trends in response to a highly competitive sales environment. These promotions were highly effective in the second quarter, however, the cost of related markdowns adversely affected gross margins. Earnings in the second quarter were down 13% from last year. However, cash flow from operations continues to be strong at 7.3% as compared to a supermarket industry average of 5.0%.
“Customers responded favorably to the promotions we offered during the second quarter, which were designed to reinforce our price leadership in all of our markets,” said Bill McCanless, Delhaize America’s chief executive officer. “We were successful in growing market share. Our comparable store sales continue to improve as we move into the third quarter.”
“Our gross margins have risen steadily over the past five years as we’ve implemented a highly successful category management program, improved our product mix and grown our private label business,” McCanless added. “These programs continue to reap benefits. We believe that this drop in Food Lion’s gross margins is a temporary condition and that the longer term margin trend remains favorable.”
Comparable store sales growth is expected to average between 1% and 2% in the second half of fiscal 2000, reflecting a continuation of the second quarter’s improved trend. The Company is committed to continuing its investment in its promotional programs in the coming quarters.
Delhaize America expects to complete its acquisition of Hannaford Bros. Co., which operates 104 supermarkets in the northeast United States, prior to August 1, 2000. Under its organic growth program, Delhaize America opened 19 new stores during the second quarter, including 18 Food Lion and one Kash n’ Karry supermarkets. The Company remodeled 39 stores, including 27 Food Lion and 12 Kash n’ Karry stores. Year-to-date, Delhaize America has opened 29 new stores and completed 56 store remodels. The Company expects to open 75 Food Lion and 10 Kash n’ Karry new stores this year and to remodel 150 stores, growing square footage by 8.0 percent.
With 1999 sales of $10.9 billion, Delhaize America is one of the nation's largest supermarket companies. The Company and its more than 95,000 employees serve more than 10 million customers a week at 1,158 Food Lion, 124 Kash n' Karry and 18 Save 'n Pack supermarkets. With the addition of Hannaford Bros., Delhaize America will have nearly 1,400 stores throughout the eastern United States from Maine to Florida, with total projected annual revenue of approximately $15 billion in the first full year of the acquisition and more than 116,000 full-time and part-time employees.
This document contains forward-looking statements that involve uncertainties. Factors that could cause results to differ materially from those in the forward-looking statements are detailed from time to time in reports filed by the Company with the SEC, including Forms 8-K, 10-Q and 10-K.
Contact: Tawn Earnest (704) 633-8250, Ext. 2185