Exhibit 99.2
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Exhibit 99.2
Transformation plan Delhaize
Belgium
Press Conference
11 June 2014
determination
integrity
courage
humility
humor
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Agenda press conference
11.00 am : Announcement Denis Knoops – CEO Delhaize Belgium 11.20 am : Q&A
Denis Knoops – CEO Delhaize Belgium
Sylvie Van Den Eynde – SVP Human Resources Delhaize Belgium
11.30 am : Availability for interviews
1.00 pm : End
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Transformation plan Delhaize Belgium
1. Context
2. Strategy Delhaize Belgium
3. Accelerated strategy implementation
4. Proposed transformation plan
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1. Context
The economic crisis has impacted the purchasing behaviour of Belgian consumers.
The Belgian food retail market has recently become one of the most competitive markets in Europe where international operators are able to fully leverage their scale and cost benefits.
Volumes and market share of Delhaize´s company operated supermarkets are under severe pressure.
Delhaize Belgium is impacted by a significant and increasing cost handicap in wage and labour conditions.
The negative evolution in market share and profitability of the company operated supermarkets is not sustainable.
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Decline in food spending driven by economic crisis
Context
Share in household budget (%)
15.8
15.7
15.7
- 2.5 %
15.6
15.5
15.5
15.4
15.3
15.3
2010 2011 2012
Food, drinks and tobacco
Source: FOD Economie, Research into household budget, October 2013
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Price increasingly important: increased penetration of cheaper private label products
Context
Private label (% total sales)
40.0
39.1
+ 12.4 % 38.1
38.0
36.0 35.9
34.8
34.0
2010 2011 2012 2013
Private label
Source: GfK Panel Services 2013, February 2014
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Continuing growth of discount formats
Context
% market share
50 46 %
45 %
44 %
43 %
40 40 % 42 % 42 %
0 38 %
35 % 35 % 37 %
31 % 33 % 30
20
10
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Discounters (Aldi, Lidl, Colruyt, Intermarché, Red Market, Profi/Smatch)
Source: Nielsen, Transparency Report
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Increased competition on the Belgian food retail market
Context
COUNTRY Belgium The Switzerland Austria Netherlands
# Large retailers
8 5 4 6
Local vs
2 local 3 local 2 local 2 local international 6 international 2 international 2 international 4 international operators
* Stores at least 500m², at least 10 stores, open for all customers
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Declining volumes in company operated supermarkets
Context
Volume evolution on a comparable basis Volume evolution on a comparable basis in in company operated stores affiliated stores
Change in % Change in %
4
3.09
2.73
3
2
2
0.89
1 0.59 0 0 -0.20
-1 -0.63 -2 -2.17 -2.00 -2 -2.92 -4 -3.41 -3
2010 2011 2012 2013 Q1 2010 2011 2012 2013 Q1 2014 2014
Source: Delhaize Analysis
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Reasons for difference in labour cost compared to
competition
Context
Assortment
Strategic
choices
Customer service level
Wage and labour conditions
Structural
handicaps
Inefficiencies
Source: Delhaize analysis
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Structural and increasing cost handicap in wage and labour conditions for company operated supermarkets
Context
Cost per productive hour (Delhaize = 100%) Main reasons
16 %
22 % 22 % 23%
33 %
Higher gross wages and benefits
Wage increases till end of 100 % service
Paid breaks
Delhaize Colruyt Carrefour Aldi Lidl Albert Heijn Difference compared to Delhaize
The cost handicap in wage and labour conditions per productive hour will continue to increase in the coming years.
Source: Delhaize Analysis
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Increased wage costs not reflected in price levels
Context
Delhaize Belgium – Internal food inflation 129 Delhaize Belgium – Labour cost Index 126
120
115
112 112 110 108 108 107 107 106 103 102 100 100
2006 = 100
2006 2007 2008 2009 2010 2011 2012 2013
Source: Delhaize Analysis
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Profitability of company operated supermarkets is under pressure
Context
Delhaize Belgium* Delhaize Belgium company operated profitability (% of revenues) supermarkets profitability (% of revenues)
Base 2010 = 100 Base 2010 = 100
-30%
100 100
96 -78% 84
73 70
31
22
2010 2011 2012 2013 2010 2011 2012 2013
* excluding Tom&Co; Profitability = Underlying Operating Profit
Source: Delhaize Analysis, Profitability per banner
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2. Clear long-term strategy aimed at strengthening the Delhaize brand
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3. Acceleration of the strategy implementation
We have taken the first steps in the transformation process, but we have to take further steps to ensure a sustainable future for Delhaize Belgium.
We have to make 450 million EUR of additional investments during the period 2015-2017 in our company operated stores, our associates, our distribution centers, our products, our prices & e-commerce.
We will have to adapt our organization and our cost handicap in wages and labour conditions in order to invest in the operations.
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Several investments and efficiency projects have already been realized
Acceleration of the strategy implementation
Important and permanent renegotiation of purchasing conditions
Various efficiency projects
New commercial strategy
Budget for store remodels and uplifts increased by nearly 50%
Period 2010-2011: € 58 million
Period 2012-2013: € 85 million
Our associates – budget for training nearly doubled
Training budget of € 10.6 million in 2009
Training budget of € 20.3 million in 2013
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Our strategy results in a positive customer satisfaction trend
Acceleration of the strategy implementation
8.08
8.05
8.02
2011 2012 2013
Customer satisfaction significantly higher after remodeling or uplift store
Source: Delhaize internal customer satisfaction study
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4. Proposed transformation plan
Delhaize Belgium intends to:
Introduce a lighter and a more efficient model for company operated supermarkets
Provide more efficient procedures and working methods, and increase focus on new technologies
Adapt the wage and labour conditions of all associates
Stop company operated activities in 14 supermarkets that have an unsustainable financial performance: Aarschot, Berlaar, Diest, Dinant, Eupen, Genk (Stadsplein), Herstal, Kortrijk Ring, La Louvière, Lommel, Oude Vest (Dendermonde), Tubize, Turnhout en Verhaeren (Schaarbeek)
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The possible impact of efficiency measures on employment of while collars
Proposed transformation plan
Intention to collectively dismiss 2,500 white collars (out of 14,878) in the supermarkets and headquarter operations. This equals 2,100 full-time
Company
equivalents*.
operated
supermarkets - Over a three year period if confirmed
- Investigate all options to avoid forced layoffs
&
Support services
There is no intention to collectively dismiss blue collars or executives.
* Figures as of 26 May 2014
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Commitment to limit the impact on our associates as much as possible
Proposed transformation plan
We acknowledge the impact of this announcement on our associates and their families and we will therefore :
Investigate all possible options to reduce forced layoffs as much as possible
Provide accompanying measures and support
Search for best solutions for re-employment
Reduce the period of uncertainty and be as transparent as possible
Find the best possible solution for each impacted associate, in accordance with legal provisions
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Legal Law Renault procedure
Proposed transformation plan
If intention is confirmed, Information sharing and the collective dismissal consultation process could be implemented as with social partners of Q1 2015
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The Law Renault consists of 3 phases
Proposed transformation plan
Statement of intention to Workers Council
Phase I Answer questions and assess suggestions.
Information & Consultation Keep associates informed about the outcome of the meetings.
Phase II
Negotiation of social plan,
Constructive dialogue focused on the interest of the associates. new wage & labour conditions
Phase III
Implementation of the social Application of the social plan, new wage & labour conditions. plan
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Ensure the future of our company
Build a sustainable business model for our company operated supermarkets
Reinforce revenues, growth, market share and profitability
Become again the favorite supermarket in the Belgian market by focusing on quality, health, assortment, shopping experience and service
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Questions?
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Interviews?
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