UPDATE: Delhaize Revenue Falls On Weak US Sales, Dollar

Supermarket operator Delhaize Group (DELB.BT) Wednesday posted an expected 2.3% decline in first-quarter revenue on tough price competition in the U.S. and a weaker dollar, but confirmed its full-year guidance.

The company posted sales of EUR4.97 billion in the three months ended March 31 compared with EUR5.09 billion in the same quarter last year, in line with analysts' estimates, as U.S. sales declined in value when converted into euros from dollars.

The dollar has declined by 5.8% against the euro when comparing the two periods. Excluding the impact of currency fluctuations, sales were up 1.7%.

Sales in the U.S., where Delhaize makes two-thirds of its revenue, fell by 0.4% as a result of lower food prices.

Delhaize confirmed its outlook for 2010, saying growth would come mostly during the second half of the year. The Belgium-based company forecast 7% to 10% growth in operating profit in 2010, at identical exchange rates, compared with 4.6% growth in 2009.

Net profit for the first quarter rose 2.2% to EUR130 million from EUR127 million a year earlier, beating analysts' expectations of EUR124 million and helped by lower taxes in the quarter.

Given the adverse retail market conditions, Delhaize's first quarter results were "excellent", said bank Degroof's Ivan Lathouders. The main positive surprise came from sales in Belgium, but Delhaize's aggressive price cuts in the U.S. to keep up with local price leader Wal-Mart Inc. (WMT), will likely result in improved consumer perception and higher sales by the second half of the year, Lathouders added.

The company, which operates the Food Lion, Hannaford and Sweet Bay chains in the U.S. and Delhaize supermarkets in Belgium, said operating profit fell 2.7% to EUR241 million from EUR247 million a year earlier, beating analysts' forecasts for EUR237 million.

In the U.S. net sales fell to $4.68 billion from $4.69 billion a year earlier, hit by 1.6% price deflation compared with price inflation a year earlier.

Quarterly sales in the company's home market of Belgium, where it competes with Carrefour (CA.FR) and hard discounter Colruyt NV (COLR.BT), came in stronger than expected totaling EUR1.14 billion against EUR1.09 billion in 2009. Carrefour is currently restructuring in Belgium, which has enabled Delhaize to gain market share. But Delhaize also improved its operating margin, making more money per product sold in comparison with the first quarter of 2009.

In Greece, where the company operates the Alfa-Beta chain, first-quarter sales were up 9.2% to EUR378 million from EUR346 million as year earlier, on high comparable store sales growth and new store openings.

At 0800 GMT Delhaize shares were down 2.2% at EUR61.35, broadly inline with the Belgian market. The share price has risen 17% since the beginning of the year as the company has maintained price competitiveness despite the hard retail environment.

Company Web site: www.delhaize.com

-By Peppi Kiviniemi, Dow Jones Newswires; [phone]; [e-mail]

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