Delhaize Group Reports Net Profit of EUR 89.7 million in Third Quarter 2005.

(From Hugin)

Third Quarter 2005 Results * Accelerating sales growth of 5.1% * Improved operating profit trend due to better sales * Net profit of EUR 89.7 million Full Year 2005 Guidance * Confirmation of sales and net earnings guidance * Operating profit guidance of 2 to 4% growth Results Delhaize America: http://hugin.info/133961/R/1020421/160755.pdf Full press release in pdf-version: http://hugin.info/133961/R/1020401/160757.pdf CEO Comments "In the third quarter, we have seen that our initiatives to further differentiate our store concepts and improve our execution have resulted in accelerated sales and earnings momentum compared to the second quarter of 2005, particularly at Food Lion, our largest banner," said Pierre-Olivier Beckers, President and Chief Executive Officer of Delhaize Group. "However, expenses related to long-term strategic initiatives such as the Victory and Sweetbay conversions and higher energy price, continued to impact negatively our operating margin, and the sales performance in Belgium remained weak due to soft consumer spending." "In spite of continuing difficult market conditions in Belgium and higher energy prices, we believe operating profit will increase by 2 to 4% in 2005. Further, we confirm our sales and net earnings guidance of respectively 3.5 to 4.5% growth and 15 to 20% growth in 2005," concluded Mr. Beckers. INCOME STATEMENT In the third quarter of 2005, net sales and other revenues of Delhaize Group increased by 5.1% to EUR 4.7 billion. Organic sales growth amounted to 2.4%, and net sales and other revenues increased at identical exchange rates by 5.0% due to: * the 5.1% increase of U.S. sales, supported by the stronger sales momentum at Food Lion and the acquisition of Victory in New England. Comparable store sales grew by 1.6% for the U.S. operations, a strong improvement compared with 0.2% in the second quarter of 2005; * the 5.0% increase of the Belgian sales, including the positive impact of the acquisition of Cash Fresh. Delhaize Group ended the third quarter of 2005 with a sales network of 2,629 stores compared to 2,614 stores at the end of June 2005. The gross margin increased to 25.3% of net sales and other revenues (compared to 25.0% in the third quarter of 2004) primarily due to lower inventory shrinkage at Food Lion and margin improvements at Hannaford and Delhaize Belgium. Selling, general and administrative expenses increased to 20.8% of net sales and other revenues (compared to 20.2% in the third quarter of 2004) primarily because of expenses related to the integration of Victory into Hannaford and the conversion of Kash n' Karry stores to Sweetbay in Florida in advance of expected sales benefits. Utility and fuel prices were higher throughout the Group, medical costs increased in the U.S., and there was a significant statutory increase in labor rates in Belgium. Other operating expenses decreased to EUR 8.7 million, primarily due to the limited impact from hurricanes in comparison with last year, partially offset by higher store closing charges and losses on the planned disposal of fixed …