62%
Food Lion
Bottom Dollar Food
Harveys
Hannaford
Sweetbay
In 2012, revenues in the U.S.
decreased by 2.2% in local cur
rency. This was mainly the result of
closing 126 stores in the beginning
of 2012. Excluding this impact, rev
enue growth stood at 0.9%. Com
parable store sales decreased by
0.8%. While this performance is
unsatisfactory, it does not yet dem
onstrate the full impact of the Food
Lion repositioning. In 2012 the num
ber of repositioned stores reached
more than 700, representing more
than 60% of the Food Lion network.
Since their launch, the repositioned
stores showed increases in transac
tion counts and real sales volume
growth. In these repositioned mar
kets, comparable store sales growth
outperformed stores that have not
yet repositioned by more then 5% at
the end of the 4th quarter 2012.
In addition to the Food Lion reposi
tioning, the Group took other impor
tant measures in the U.S to solidify
the health and the future growth of
the company. At the beginning of the
year management made the deci
sion to retire the Bloom banner. This
decision was not taken lightly, but it
was deemed necessary in light of the
strategic choice to focus resources
on a limited number of projects.
Similarly, expansion of Bottom Dol
lar Food was focused on increas
ing density in its first two markets:
Philadelphia and Pittsburgh. Finally,
at the beginning of 2013, Delhaize
America trimmed its Sweetbay store
network to provide more oxygen for
the remainder of the portfolio.
As a result of price investments,
especially at Food Lion, and the
negative impact from the closure
of 126 stores, the U.S. gross mar
gin decreased in 2012 by 107 basis
points to 26.2%. At the same
time, lower sales and the impact
of the Food Lion brand reposition
ing resulted in an increase of sell
ing, general and administrative
expenses as a percentage of rev
enues by 21 basis points to 23.0%
mainly. This increase was partly
offset by the reduction of the U.S.
bonus accrual.
The operating margin of the U.S.
business decreased from 3.9% in
2011 to 2.3% in 2012 mainly because
of the $249 million impairment and
store closing charges.
Total capital expenditures were
$455 million, an decrease of 21.4%
compared to prior year.
Founded in 1957, Food Lion prides
itself on offering customers conveni
ent stores providing a good assort
ment of quality products at low
prices. At the end of 2012, Food Lion
operated 1 138 stores located in 10
states in the Southeastern United
States. In 2011 the company launched
the brand repositioning project
which focused on the elements Sim
ple, Quality and Price. Using a com
bination of limited capital and asso
ciate training these elements aimed,
amongst others, at enhancing the
customer satisfaction through price,
fresh produce and an easy and con
venient shopping experience. The
brand repositioning project created
a positive dynamic around Delhaize
Group's largest banner. In 2012
more than 500 stores were repo-
sitioned in Virginia, West Virginia,
North Carolina and South Carolina.
By lowering prices, training associ
ates and investing its capital smartly,
Food Lion stabilized the business in
launched markets and set the foun
dation for future growth.
Bottom Dollar Food is Delhaize
Group's discount format in the U.S.
offering a limited assortment of
about 7 000 products, including
meat and produce, with a laser-like
focus on keeping prices low for cus
tomers. At the end of 2012, the Bot
tom Dollar Food network numbered
56 stores, 29 in Philadelphia and
13 in Pittsburgh, its two core mar
kets. At the start of 2012 the banner
opened 14 stores in two weeks in
Pittsburgh and ended the year with
a total of 27 new stores.
Harveys is a supermarket format
focused on serving rural markets in
Georgia, South Carolina and North
Florida and offering a highly local
ized assortment of regional favorites
and fresh products. The banner
possesses strong brand recognition
and customer loyalty. At the end of
2012, Harveys operated 73 stores.
Hannaford is a chain of 181 large
stores, with an average selling area
of 40 000 square feet. The stores
offer a wide range of high quality
and fresh products, typically car
rying on average 35 000 SKUs.
Additionally, more than 81% of the
stores has pharmacies. Hannaford
augments its quality positioning
and increases its value proposition
by being priced right every day. This
everyday pricing is a foundational
element in the Hannaford strategy
and substantial work to support this
was done in 2012. Hannaford also
takes pride in offering sustainable
seafood as well as locally-grown
and locally-made products.
Located in Southwest
Florida, Sweetbay has
a reputation for quality,
price and fresh food.
The banner is also well-
known for its strong
Hispanic food offering.
At the end of 2012 Sweetbay oper
ated 105 stores. However, in the first
quarter of 2013, Sweetbay closed
34, primarily loss making, stores
throughout its network.
of all Food Lion stores were
repositioned, meaning
more than 700 stores.
DELHAIZE GROUP ANNUAL REPORT '12 31
