Zacks Investment Research upgraded
Etablissements Delhaize Fr
), better known as Delhaize Group, to a Zacks Rank #1 (Strong
Buy) on Sep 12 after the announcement of solid second quarter
2013 results and enhanced outlook for the year.
Why the Upgrade?
Delhaize Group reported solid second quarter 2013 results on
Aug 8. Organic sales increased 1.9% on the back of positive
comparable store sales growth of 1.1% in the U.S. and 0.8% in
Belgium. Underlying operating margin also improved to 3.6% in the
second quarter (3.8% in the U.S. and 4.1% in Belgium), owing to
cost cutting measures.
Delhaize Group operates through food supermarkets and operates
companies in 10 countries on three continents - America, Europe
and Asia. These companies have been grouped into three segments
for the purposes of reporting: the United States, referred to as
Delhaize America, Delhaize Belgium and Southeastern Europe &
Delhaize makes about two-thirds of its revenues in the United
States and has been cutting costs, expanding volumes and
revamping its main Food Lion chain in the country to counter
stiff competition and sluggish consumer spending.
In Belgium, sales growth in the second quarter was mainly
driven by increased market share due to the successful reopening
of the remodeled stores and network expansion. In Southeastern
Europe, the company witnessed improvement in both revenues and
Of late, Delhaize Group has been working on simplifying the
company's U.S. operations to enable it to better focus on its
core businesses in the region. In order to do so, during May, the
company agreed to divest all of its U.S.-based Sweetbay, Harveys
and Reid's supermarket stores to another national supermarket
chain, Bi-Lo Holdings, for $265 million in cash. The transaction,
subject to some regulatory approvals, is expected to close in the
fourth quarter of 2013. Further in July, DEG announced the
planned divestiture and master franchise agreement of its
operations in Montenegro.
The company's cost cutting efforts and planned divestitures
have yielded positive results. This has encouraged the company to
nudge up its full-year operating profit outlook for 2013.
Delhaize Group raised its underlying operating profit guidance
from approximately Euro 775 million to at least Euro 780
Estimates have mostly increased after the strong second
quarter results and an upbeat outlook for the year. The Zacks
Consensus Estimate increased 4.6% to $5.89 per share for 2013,
while it advanced 4.5% to $5.86 per share for 2014 over the past
Other Stocks to Consider
Besides Delhaize, other retailers worth considering are
Haverty Furniture Cos. Inc.
Restoration Hardware Holdings
), all of which carry a Zacks Rank #1 (Strong Buy).
DELHAIZE-LE (DEG): Free Stock Analysis Report
HAVERTY FURNIT (HVT): Free Stock Analysis
KIRKLANDS INC (KIRK): Free Stock Analysis
RESTORATION HDW (RH): Free Stock Analysis
To read this article on Zacks.com click here.