In 2008, two elements will have a technical impact on our results:
- in the U.S. there will be 53 weeks in the fiscal year 2008 compared to 52 weeks in 2007.
- in 2008, we are adjusting our cost allocation policy. Certain costs previously allocated to the segment “Corporate (unallocated)” will now be allocated to the segment “Belgium”.
This note should help to better assess the impact of both changes on our results.
53rd Week in the U.S.
Delhaize Group’s fiscal year ends on December 31. However, the fiscal year of Delhaize Group’s U.S. businesses is the Saturday closest to December 31, and generally includes 52 weeks, except every other five years when it includes 53 weeks. The Group’s results include those of our U.S. businesses based on their fiscal calendar, with no adjustment made for the difference in reporting date. The fiscal year of our U.S. businesses will include 53 weeks in 2008 compared to 52 weeks in 2007.
The calendar adjustment in 2008 has two positive effects on our results:
- An extra week to our annual and fourth quarter sales, creating a positive effect on sales growth.
- A positive impact on our profit growth, particularly for the 4th quarter due to the extra sales week while certain costs are fixed on an annual basis independent of the number of sales weeks, particularly depreciation and rents. These fixed expenses are equally spread over 4 quarters.
The estimated impact on our 2008 guidance is approximately 1.5% additional revenue growth for Delhaize Group and approximately 3.5% additional operating profit growth (at identical exchange rates).
Change in Cost Allocation Policy Effect on Segment Reporting
Beginning in 2008, Delhaize Group will be changing its cost allocation policy. Certain costs previously included in the segment “Corporate (unallocated)” will now be allocated to the segment “Belgium”. Prior to 2008, Corporate related costs were allocated (through invoicing) only to businesses operating in separate legal entities.
To help assess the impact of this change, the tables below show the 2007 full year and quarterly results adjusted for the new methodology. This change has no effect on the consolidated results of Delhaize Group. Beginning in 2008, comparative and historical results will be shown on an adjusted basis in the quarterly press releases and in the annual report.
CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
Statements that are included or incorporated by reference in this press release and other written and oral statements made from time to time by Delhaize Group and its representatives, other than statements of historical fact, which address activities, events and developments that Delhaize Group expects or anticipates will or may occur in the future, including, without limitation, statements about strategic options, future strategies and the anticipated benefits of these strategies, are “forward-looking statements” within the meaning of the U.S. federal securities laws that are subject to risks and uncertainties. These forward-looking statements generally can be identified as statements that include phrases such as “guidance”, “outlook”, “projected”, “believe”, “target”, “predict”, “estimate”, “forecast”, “strategy”, “may”, “goal”, “expect”, “anticipate”, “intend”, “plan”, “foresee”, “likely”, “will”, “should” or other similar words or phrases. Although such statements are based on current information, actual outcomes and results may differ materially from those projected depending upon a variety of factors, including, but not limited to, changes in the general economy or the markets of Delhaize Group, in consumer spending, in inflation or currency exchange rates or in legislation or regulation; competitive factors; adverse determination with respect to claims; inability to timely develop, remodel, integrate or convert stores; and supply or quality control problems with vendors. Additional risks and uncertainties that could cause actual results to differ materially from those stated or implied by such forward-looking statements are described in Delhaize Group’s Annual Report on Form 20-F for the year ended December 31, 2006 and other periodic filings made by Delhaize Group with the U.S. Securities and Exchange Commission, which risk factors are incorporated herein by reference. Delhaize Group disclaims any obligation to update developments of these risk factors or to announce publicly any revision to any of the forward-looking statements contained in this release, or to make corrections to reflect future events or developments.
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