By Maarten van Tartwijk
Supermarket operator Delhaize Group (DEG) said Thursday that its
operations in Greece have recorded a sharp jump in sales in recent
weeks, as cash-strapped consumers rushed to buy groceries in
response to the country's economic and political turmoil.
Delhaize said it saw a notable increase in sales in the days
after the Greek government called a referendum June 26 on whether
it should accept tough austerity measures in return for fresh
financial aid.
"Consumers started to stock up due to the announcement of the
referendum, anticipating on the economic uncertainties," Chief
Executive Frans Muller said after Delhaize reported second-quarter
earnings. "We saw a significant uplift in sales until the new
agreement [between Greece and its creditors] was signed."
Brussels-based Delhaize, which last month agreed a $29 billion
merger with its Netherlands' rival Royal Ahold NV [AH.AE], has a
sizable presence in Greece through its Alfa-Beta supermarket
chains. The retailer is one of the few multinationals that has
ramped up investments in the country over recent years: by the end
of June, it owned 333 stores, up from 223 in 2010 when Greece
received its first package of financial aid.
Without giving specific figures, Mr. Muller said the Greek
business managed to grow revenue and market share in the second
quarter and that "profitability grew even faster," in part due to
promotions, new store openings and better terms with suppliers.
However analysts say Delhaize's exposure to Greece poses a
potential risk. The country accounts for 10% of the group's
operating profit and a Greek exit from the eurozone could trigger
180 million euros ($198 million) in asset write-downs, according to
brokerage firm Kepler Cheuvreux.
Mr. Muller, who was speaking to analysts via a conference call,
said the outlook for the remainder of the year is uncertain due to
capital controls that set a limit on cash withdrawals and money
transfers, complicating payments to suppliers outside Greece.
The implementation of new austerity measures, including a higher
sales tax on certain food categories, could also have a negative
impact, he said.
"We've been relatively successful to run our operations as
normal as possible, despite the capital controls in place," Mr.
Muller told analysts. "But we don't have visibility that we can
continue our performance of the first half."
Still, Mr. Muller said there is reason for optimism if the Greek
government moves ahead with planned economic overhauls. "It will be
easier [for stores] to open on Sundays, and it will be easier to
run discounts throughout the year and sell drugs and medicines in
supermarkets," he said. "We believe there will be opportunities for
the food retail sector."
Write to Maarten van Tartwijk at maarten.vantartwijk@wsj.com
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