GROUP
MATS JANSSON
CHAIRMAN DELHAIZE GROUP
What are the next steps you
will take to fire up the U.S.
operations?
POB: Food retail is indeed about
large quantities and efficient pro
cesses. This makes people highly
important. An example of what we
did in this respect is the launch of a
high level international trainee pro
gram in 2009. Today these trainees
have found their way in our company
and have become valuable ambas
sadors of the Delhaize Group brand
and the banners it represents. The
number of candidate trainees is now
close to one thousand for each class
of 10 selected recruits, underlining on
the one hand our determination to
look for the best human capital and
on the other hand the attractiveness
of Delhaize Group as an employer.
I learned from my childhood that retail is
about giving your customers what they
deserve: excellent service, a high quality
assortment and affordable prices.
6
Is the Delhaize Group strategy
still founded on the New Game
Plan?
MJ: Absolutely. The three pillars,
accelerated growth, higher efficiency
and sustainability that were set for
ward when Delhaize Group launched
the strategic plan at the beginning of
2010, are more than ever crucial in
our efforts to become a best-in-class
retailer. The whole organization is
focused on delivering on this strat
egy for all of our stakeholders. And
in order to retain talented associates
it is crucial to offer them a common
set of visions and values. They are the
overarching element of our strategic
framework.
POB: However, we realized that, in
order to make fast and coherent deci
sions to execute our strategic choices
across three continents, we needed
to improve our tools. So we devel
oped eight principles (see overview on
page 11). They are designed to help all
of our associates, from the store floor
to the members of the Executive Com
mittee, to make daily decisions that
are consistent with and in support of
our Group strategy.
Generating free cash flow
became one of the critical action
points in 2012. Why is this so
important?
POB: In 2012, we set a target of €500
million free cash flow. As technical as
this may sound, the importance of
this key performance indicator can
not be underestimated. It is crucial
in these difficult times to safeguard
the liquidity and the financing of the
company. It is the blood we need to
ensure that we can keep the virtuous
circle turning and continue to focus on
our customers. When we announced
the €500 million target it was consid
ered very ambitious, but at the end
of 2012 we are pleased to have over
delivered on our promise. This was
made possible by rigorously monitor
ing our working capital, by a ruthless
discipline on capital allocation and by
driving the operations in the stores.
It provides us with confidence in our
future. The focus on cash flow was
also an important signal to the inves
tor community. In December we suc-
cessfully refinanced a Euro and Dollar
bond with a new €400 million bond,
resulting in lower financing costs and
improving our debt profile.
In the U.S. Food Lion got a lot
of attention in 2012.
POB: The preparation work for the
Food Lion Brand strategy and the first
steps of its implementation took place
in 2011 and we continued the roll-out
in 2012. Given its importance, it was
paramount to do the job right from
the start. With 62% or more than 700
of the Food Lion stores repositioned
today, we can say that we have made
significant progress. More impor
tantly, the results of the repositioned
stores continue to be pleasing. We
see meaningful uplifts in transactions,
volumes and ultimately comparable
store sales growth. Also, the stores
that have cycled the first 12 months
show year-on-year growth in transac
tions, items and sales. Customer feed
back points to improved perception
in terms of service levels in the store,
in terms of variety in fresh produce
and private label and finally in terms
of price as the accompanying price
investments have not gone unnoticed.
MJ: Food Lion had to step up its efforts
to be more in line with what custom
ers need on service levels and prices. I
was in the U.S. several times last year
and I was impressed by our opera
tions. The repositioning work we are
doing is a reflection of the new reality
in food retail, so what we are doing,
i.e reducing the price gap, closing
underperforming stores and polish
ing the image of the brand, is the right
approach. It is too early to say that
we have solved all problems, but we
are clearly doing the right things to
increase and further deploy the real
potential of Food Lion.
POB: It is obvious that we want to
stay on top of our game to safeguard
the Group's interests in the U.S. In
2012, we were faced with increased
competitive pressure for our Hanna-
ford banner. In order to stay relevant
to our customers in this market, we
