Delhaize Group ADRDEG

Morningstar Rating

Stock Research and Analysis

by Michelle Chang, CFA

Since acquiring a 22-store chain in the Carolinas around 35 years ago, Delhaize Group has built a formidable East Coast presence. Today the firm operates around 1,600 grocery stores in the United States, which account for nearly 70% of its sales. With Read more

Bulls Say

Delhaize is an industry leader in profitability, generating nearly 5% operating margins compared with 3%-4% earned by many of its peers.

The company has a unique corporate culture that fosters entrepreneurialism and innovation through a decentralized management style. Delhaize has also used acquisitions to improve its capabilities in format differentiation and technology.

Delhaize operates a variety of formats, from high-end gourmet supermarkets like Bloom to deep-discount stores such as Bottom Dollar.

Delhaize has the resources and capability to act as a consolidator in the U.S. grocery industry. Read more

Bears Say

Operating in the middle of the high-low spectrum of the supermarket industry is difficult, with consistent pressure on pricing limiting margin expansion and keeping returns on invested capital at modest levels.

Operations outside the U.S. have been a mixed bag in the past. While Greece is solid, emerging markets have historically been a sore spot, and the company is fighting off deep discounters in its home market.

Delhaize's results are sensitive to currency fluctuations, making predictions of sales and earnings more difficult.

Food deflation and a slowing economy are pressuring grocers as consumers seek to moderate spending where they can. The environment has been beneficial to Wal-Mart WMT and Costco COST, which have increased market share in the grocery industry. Read more

Strategy

Delhaize intends to increase sales by tailoring its stores to better meet the changing needs of different communities, improving its price image, and building and acquiring stores where the company already Read more

Management

Pierre-Olivier Beckers worked his way up the corporate ladder from store manager, becoming CEO in 1999. He is surrounded by a deep bench of industry veterans. We don't take issue with Beckers' EUR 2.5 million in annual cash compensation, but we do not Read more

Profile

Headquartered in Belgium, Delhaize is primarily a food retailer, operating or serving around 2,700 stores in seven countries. Store formats are primarily supermarkets, which Read more

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