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Bloomberg reports that in an interview yesterday, Ahold CEO Anders Moberg emphasized that the performance review that resulted yesterday in the announcement that the company would sell US Foodservice and its Tops grocery chain has not been completed. “We need to operate at a lower cost level, reduce costs across the company,” he said at a press conference. “We will review underperforming stores on an ongoing basis."

As reported yesterday morning on MNB, Ahold announced yesterday that it also said it would sell its retail operations in Poland and Slovakia, as well as its 49 percent stake in Portugal-based Jeronimo Martins. Ahold said it would focus its operations in the Netherlands, and the Czech Republic, and would maintain continue its majority stake in Scandinavian unit ICA and Dutch retailer Schuitema. The reported goal is to reduce operating costs by more than $600 million (US), and return the money to shareholders as well as reduce debt. Ahold also named Dick Boer to be the new COO for Europe and Lawrence Benjamin the new COO for the US.

Other comments by Moberg included:

Regarding the sale of US Foodservice… “There is a lot of interest out there and companies have tried to contact us.” (Moberg said the interest has come both from food companies and from private equity firms.)

Regarding his goals… “I committed myself when I joined in 2003, and I aim to live up to the targets.”

Regarding a possible merger or sale of assets to Delhaize… “We're always looking into opportunities. We'll keep our eyes open.”

Regarding the future… “At the heart of our new continental structure is our commitment to remaining a strong global team. Our new structure will enable us to execute our strategy more effectively as a combined organization. We will be able to better drive operational synergies and leverage our retail capabilities and talent across all of our businesses. Our people have always been and will continue to be our greatest asset.”

However, not all analysts are convinced that Ahold’s moves better position it for a viable and profitable future. Some think that it is too little too late, while at least one analyst quoted in the media suggests that the naming of Benjamin – currently CEO of US Foodservice - as COO of US operations implies “a disqualification of the current US food retail management.”
KC's View:
It was ironic that as Ahold announced its review results yesterday, a federal prosecutor was giving the closing argument in the $800 million accounting fraud trial of former US Foodservice executive Mark Kaiser, who was charged with conspiracy, securities fraud and making false SEC filings.

“This was an astonishing degree of corruption at the highest levels of corporate America,” said Assistant U.S. Attorney Lawrence Gerschwer.

It was, of course, this accounting scandal, connected to an overstatement of the company’s profits, that resulted in the forced resignations of several senior executives, including the then-CEO, Cees van der Hoeven.

One of the things that concerns us about the announced review results is that there seems to be a real commitment to increasing efficiency. Not that this is a bad thing, but if the focus is efficiency rather than effectiveness, it all will be in vain. For example, there remain considerable doubt among many industry experts about the efficacy of the Giant-Stop & Shop operational merger, which some believe has undermined Giant’s local image and advantage in the Washington, DC, market. Time will tell if these doubts are accurate, but you have to concede that these doubts exist.

We also suspect that for many people at Ahold, especially here in the US, there isn’t a great deal of relief now that the initial results of the performance review have been announced. It seems to us that regardless of what Moberg says about wanting to achieve his goals, it is pretty clear that the company is in play. Now, it’s all about price.

Anyone or anything that doesn’t add value probably is expendable.