* Q1 operating profit 218 mln euros vs 231 mln expected
* U.S. comparable sales better than expected
* Belgium comparable sales flat vs f'cast 2percent rise
* Shares drop to 3-1/2 month low
(Adds comments, share price reaction)
By Robert-Jan Bartunek
BRUSSELS, May 4 (Reuters) - Belgian supermarket group Delhaize saw its profit margins squeezed in the first quarter as it refurbished U.S. stores and cut prices in Belgium.
Sales in Belgium fell short of the market consensus, but the company managed higher-than-expected sales in the United States, where it was able to pass on higher prices to consumers.
"As expected, our operating margin is a reflection of the investment we are doing in prices throughout the group, as well as a consequence of all of the new game plan initiatives that will lead to sales improvement later in the year," CEO Pierre-Olivier Beckers said in a conference call with analysts.
Comparable store sales in the United States, where Delhaize generates about 70 percent of its sales, fell by 0.3 percent, not as much as the 0.6 percent decline expected in a Reuters poll. It was the third straight quarter in which the pace of decline had lessened.
In Belgium, where Delhaize introduced further price cuts, like-for-like sales were flat. Analysts had expected a 2 percent rise.
Group operating profit decreased 9.4 percent to 218 million euros ($323 million) in the first three months, below the average 231 million expected by six analysts in a Reuters poll.
Shares in Delhaize fell to their lowest point for more than three months on Wednesday, down 5.2 percent, but recovered somewhat to trade 2.3 percent lower in later session.
Analyst Marc Leemans at Bank Degroof said he expected the margin squeeze to be temporary.
"I think part of the margin pressure was price investments, and some costs will not return in the coming quarters, such as the refurbishment of shops," he said.
French peer Carrefour said in April that its recently restructured Belgian business was continuing to improve, with like-for-like sales increasing 2.3 percent.
In March, Delhaize bought Serbian retailer Delta Maxi Group, gaining a strong foothold in the Balkans. Delhaize said it expected to close the acquisition in the third quarter. (Reporting by Robert-Jan Bartunek; Editing by David Holmes and Will Waterman) ($1=.6751 Euro)