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Delhaize America announced this morning that it will look to “strengthen its US portfolio” by closing 113 underperforming Food Lion stores, retiring its more up-market Bloom banner, and laying off about 4,900 employees. The moves are expected to happen within the next 30 days.

“Today’s actions will continue to solidify our U.S. operations and enable our company to focus on our successful brand strategy repositioning at Food Lion and the expansion of Bottom Dollar Food in new markets,” said Ron Hodge, CEO of Delhaize America, in a prepared statement. “While these were difficult decisions given the impact on our associates, customers and communities, we believe these actions will enable us to better serve our customers in our markets with high density, while positioning the company for future growth.”

The Food Lion closures are said to be primarily in markets where the company has the least store density. In addition, the company said it would convert 64 Bloom and Bottom Dollar Food stores in Maryland, North Carolina and Virginia to the Food Lion banner, close seven underperforming Bloom stores and six underperforming Bottom Dollar Food stores in overlapping Food Lion markets, and convert one Food Lion store in Florida to its Harveys banner. Delhaize also said it would discontinue operations of its distribution center located in Clinton, Tenn.

The announcement this morning emphasized that the company is pleased with a brand repositioning strategy that it has been implementing, and that it plans to accelerate its rollout to more than 600 additional stores.

“Food Lion is focused on repositioning our business for future growth,” said Cathy Green Burns, president of Food Lion.  “By closing underperforming stores, we will continue to position Food Lion for success, especially in light of our brand strategy results.  We are very pleased with the reaction from our customers on the implementation of our new brand strategy work, which includes being recognized as a price leader, making our stores easier to shop, offering the greatest value in private brands and providing fresh produce.  However, we also determined the most successful markets for these investments are areas where we have strong store density or high market share.”

Belgium-based Delhaize also reportedly plans to shutter 20 convenience stores and supermarkets in Bulgaria, Serbia and Bosnia & Herzegovina.

A Reuters story on what precipitated the moves notes that “Delhaize said that comparable store sales fell by 0.4 percent in the United States in the final three months of 2011, hit by inflation and weak consumer confidence. Belgian stores registered a like-for-like decline of 1.5 percent.”
KC's View:
I have to admit that I’m a little disappointed by the retiring of the Bloom concept; I was there when the company opened the first store under that banner, and I always liked the idea that Food Lion had a more upscale sibling to balance out its retail portfolio. This either proves that I have no idea what I’m talking about, or that the world and the economy changed to an extent that made having such an offering less sensible (especially if Delhaize thought that it could not compete in this area with other chains, like Harris Teeter and Publix, for example). I hope it’s the latter; I’d hate to find out that after all these years I’m a complete moron.

It is worth noting that the company continues to invest in its Bottom Dollar discount format - with 14 stores expected to open in Pittsburgh and Youngstown, Ohio by the end of the first quarter, another 10-15 by the end of the year, and hundreds planned for the next five years.

Nothing wrong with retrenching when things aren’t going the way you want things to go. Tough times require tough decisions ... and I have a lot of confidence that Ron Hodge and Cathy Green Burns, both of whom I have known for a long time, are the right kind of leaders to assure that Delhaize America gets over this rough patch.