Etablissements Delhaize Freres et Cie "Le Lion" S.A. (DEG)

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Etablissements Delhaize Frères et Cie "Le Lion" (Groupe Delhaize) Société Anonyme (DEG)

Q1 2013 Earnings Call

May 08, 2013 3:00 am ET


Frederic van Daele

Pierre-Olivier Beckers - Chief Executive Officer, President and Director

Pierre Bruno Charles Bouchut - Chief Financial Officer and Executive Vice President


Fabienne Caron - Kepler Capital Markets, Research Division

John Kershaw - Exane BNP Paribas, Research Division

Fernand de Boer - Petercam S.A., Research Division

Pascale Weber

James G. Collins - Deutsche Bank AG, Research Division

Robert Joyce - Goldman Sachs Group Inc., Research Division

James Grzinic - Jefferies & Company, Inc., Research Division

Robert Jan Vos - ABN AMRO Bank N.V., Research Division

Cedric Lecasble - Raymond James Euro Equities


Frederic van Daele

Thank you, operator. Good morning, everyone. Welcome to the conference call regarding Delhaize Group Results for the First Quarter of 2013. This will be a combined analyst and media call. I just want to remind you that today's presentation and discussion will include forward-looking statements. We want to caution you that such statements are predictions and that actual events or results can differ materially. Factors that may have a material effect on our business are detailed in the cautionary notes in our earnings release and our complaint in our SEC filings. These statements are made as of the date of this presentation and Delhaize Group assumes no obligation to update this information. Today, we have the following people with us: Pierre-Olivier, CEO, Delhaize group; and Pierre Bouchut, CFO, Delhaize Group. During this call, we will look back on our performance in the first quarter, followed by comments on operations. And afterwards, we will take questions. For those unable to stay on call or wish to listen to it again, a replay will be available on the website.

I will now turn over to Pierre-Olivier Beckers.

Pierre-Olivier Beckers

Thank you, Frederic. Hello, everyone, and thank you for joining our conference call to discuss our first quarter results. This morning, we also announced my intention to retire as CEO by the end of this year. I will remain thereafter as a non-Executive Director on the Board of Directors. After serving Delhaize Group for 30 years, of which nearly 15 years as CEO, I did not make this decision lightly. I think you all know my passion for this company, my enthusiasm for retail and my deep sense of responsibility. In addition, I can assure you that my energy level is absolutely intact. Nonetheless, the Board of Directors and I have agreed that the time is right to move forward into a succession plan. So why? And why now?

Choosing the appropriate moment for a CEO to retire is by no means, an exact science. Sometimes, there is a right time and now, it's that time. First of all, I have always been transparent and outspoken about my conviction that no one should have a sort of divine and permanent right to his or her job. And so, this applies to me as well. I have said that it is healthy and important from time to time for a company to install a new person at the top. Someone who will bring new thinking and a fresh pair of eyes to the reality, the challenges and opportunities facing the company. In addition, it is clear that after a challenging last couple of years, Delhaize Group is building again momentum as indicated by our results of the last 3 quarters. Our stock price has responded well. There is more stability in our operations. We are moving in the right direction.

And as I look into the future, I am confident that we have great strength. And I'm realistic that we face challenges as well. It is the nature of our industry that you must constantly reinvent yourself to capture growth where it will be tomorrow and to avoid the risk of becoming irrelevant to your customers. We are no exception. And this is why, now is the right time to start looking to my successor. We need to appoint a new captain who will bring his or her new thinking and then lead the company for many years as we execute our strategy. As a consequence, the Board and I are now actively engaged in a process that will consider both internal and external candidates, and that is designed to provide for a smooth and orderly transition by the end of this year.

In the meantime, I remain fully committed to lead our company and support each and every one of our 158,000 associates to the best of my ability. There will be no void of leadership. I am staying firmly at the helm until a smooth transition has taken place. And so, with this spirit in mind, I will now start the review of our Q1 results.

You will be familiar by now but that I will use a Slide presentation for this call, which you can find in the website in case you did not receive it by mail this morning. On Slide 3, we show the highlights of the first quarter and you can see that our Group recorded an accelerating organic growth at 3.8%. We have, in particular, a strong quarter in the U.S. comparable store sales growth of 1.9% with a further improved results compared to the second half of last year, especially if you consider that we were still running with around 50 basis points of deflation. Both Food Lion and, to a lower degree, Hannaford, experienced significant positive regrowth. Our profitability saw a strong recovery. This was boosted by favorable weather conditions, cost savings, lower losses at Bottom Dollar Food and the benefit from closing underperforming stores.

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