Delhaize Group (Delhaize) recorded y-o-y decline in sales in 2Q 08, primarily due to slower growth across all geographies. Operating margin declined y-o-y due to an increase in Cost of Goods Sold (COGS), as a percentage of sales. Going forward, we expect Delhaize to experience decline in revenues due to a challenging economic scenario. Rising food inflation and unemployment are expected to limit consumer spending across all the company's operating geographies, leading to a decline in revenue growth during our investment horizon. The company is expected to continue price investments in order to remain competitive in the market. Considering the challenging market conditions characterized by rising commodity, fuel and labor costs and price investments, we believe Delhaize’s operating margin will also be negatively impacted, going forward.

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