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Delhaize Falls after Missing Sales Forecast

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Shares of Belgian super market Delhaize  (NYSE: DEG) are down over 9 percent in morning trade and close to a 52 week low after the company warned that sales will come in below analyst estimates. The company now expects fourth quarter sales to come in at 5.64 billion euros which is below consensus estimates of 5.68 billion euros.

Delhaize said that comparable store sales fell by 0.4 percent in the United States in the final three months of 2011, hit by inflation and weak consumer confidence. Belgian stores registered a same store decline of 1.5 percent.

The company which gets 65% of its revenues from its US stores such as Bottom Dollar Food, Harveys, Hannaford Supermarkets, Reid’s and Sweetbay said it plans to cut 5000 jobs and close underperforming stores.


Pierre-Olivier Beckers, President and Chief Executive Officer of Delhaize Group said: “While we grew our revenues for the full year, we are disappointed in the fourth quarter revenues in the U.S. and Belgium. Consumers continued to feel pressured in the fourth quarter due to the macro-economic environment and this led to a reduction in spending. We also encountered an increase in competitive activity. We are determined to further improve our price competitiveness in 2012, particularly in the U.S. and Belgium.

“After a thorough review of our store portfolio, we have decided to close or convert a number of stores in the U.S. and in Southeastern Europe during the first quarter of 2012. This decision is in line with our New Game Plan which is aimed at accelerating profitable growth. For a retailer, it is never an easy decision to close stores as we are fully aware of the impact on our associates, our customers and the communities we serve. Having said that, we feel these decisions are in keeping with our responsibility to our shareholders to deploy resources where they will achieve the highest return. We fully expect these actions to be value enhancing in 2012.”

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edliston
Post Written By: Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.


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Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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