Belgian supermarket chain Delhaize Group (DEG) Thursday said it plans to cut an extra EUR300 million in costs per year by 2012 and expand in new markets as part of a broader move to become more competitive and maximize its resources.

Delhaize, which makes about 70% of its profit and sales in the U.S., saved EUR60 million in 2008, and will save EUR100 million this year, the company said in connection with a strategy presentation to analysts in Athens. It also plans to triple growth in its newer business and geographical areas, it said.

Its new strategy, dubbed the "New Game Plan," will also put more emphasis on price competitiveness, the products' health and wellness and corporate responsibility, Delhaize said.

"Each of our banners is planning a new and more aggressive pricing strategy from the start of 2010 by benchmarking itself against the leading price competitor with, as a goal, to further narrow the gap," the company said in a statement.

Delhaize wants to target rivals such as Wal-Mart (WMT) in the U.S. and Colruyt NV (COLR.BT) in Belgium. The Belgium-based grocer saw its U.S. sales grow in the second quarter because of comparatively low prices and strong promotion of value-brands. Still, competitors have pledged to aggressively cut their own prices, moves which could erode Delhaize's advantage.

Delhaize plans to increase the use of its low-cost supermarkets, such as Bottom Dollar Food and Red Market, as well as boost expansion in its newer markets --Greece, Romania and Indonesia.

The aim is to accelerate top line growth, said KBC Securities analyst Pascale Weber, who welcomed the company's news. She upgraded Delhaize rating to accumulate from hold, and noted the stock is trading at an "excessive discount" compared with peers.

Last month, Delhaize raised its full-year outlook after surpassing market hopes with a 28% surge in third-quarter net profit. Although its sales had declined in the U.S. due to a continuing price war among grocers there, the Belgium-based grocer said it nonetheless managed to offset the decline with cost cutting and outperformed the market and had grown volumes by using targeted promotions and price reductions and making sure its stores were as efficient as possible.

Delhaize shares rose after Thursday's news and at 1005 GMT were up 3.4% to EUR53.29, making the stock the best performer in a higher Brussels market. The retailer's shares have gained 10% in the last year, underperforming the Bel-20 index which has risen 40%.

Delhaize generates most of its profit and sales in the U.S., mostly in the south east where it operates the Food Lion, Hannaford and Sweet Bay chains. In 2008, Delhaize's revenue from its U.S. stores was $19.2 billion.

Company Web site: www.delhaizegroup.com/

-By Alessandro Torello, Dow Jones Newswires; +32 2 741 14 88; alessandro.torello@dowjones.com
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