The Belgian retailer, which runs stores in seven countries including the US, expects net profit from continued operations to rise by between 15 and 20 per cent this year instead of 25 to 30 per cent forecast previously.
Revenues are expected to increase by between 3 and 4.5 per cent compared with an expected 4 per cent to 5.5 per cent.
Projected revenues for the second quarter, which Delhaize will post on August 4, are likely to come in at 4.5 billion (£3.58 billion) – down 7.5 per cent at actual exchange rates.
Higher oil and food prices have prompted consumers to tighten their belts, but Delhaize chief executive Pierre-Olivier Beckers remained confident about prospects.
He said: “While the environment requires us to address short-term market challenges, we remain focused on our long-term strategic commitments. We are implementing sustainable gross margin and cost-cutting measures to reinvest in our business and protect our bottom line.”
He added that there would be continued efforts to improve execution and that Delhaize’s private-label offer would be strengthened.
Delhaize intends to make savings of more than 60 million (£47.7 million) before the end of the year, including cutting transport and warehousing expenses as a result of efficiency gains, more efficient advertising spend and other measures.
The impact of the slowdown has been particularly bad in Delhaize’s domestic market, according to Planet Retail global research director Bryan Roberts.
He said German hard discounters, as well as rivals such as Colruyt and Carrefour, have wooed shoppers away from Delhaize. However, he believes that the fact Delhaize expects to increase sales and profits shows it has a strong position. “There are a lot of companies that would kill for bad news like that,” he said.
However, broker Dresdner Kleinwort observed: “Delhaize’s warning confirms the magnitude of the deteriorating consumer backdrop in the US and European markets.”
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