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AMSTERDAM -- Royal Ahold here revealed the results of its exhaustive retail review yesterday, confirming weeks of speculation that the retail conglomerate would unload its U.S. Foodservice division. Additionally, the company is selling off the rest of its Tops Markets locations
Other measures Ahold will take include the reduction of operating costs by 500 euros by the end of 2009, the cutting of group support office costs by 50 percent by the end of 2008, the divestment retail operations in Poland and Slovakia, the sale of its 49 percent stake in Jeronimo Martins Retail, the implementation of brand improvement and value repositioning, the reaffirmation of 5 percent retail net sales growth and 5 percent retail operating margin targets, and the return of about 2 billion euros to shareholders and the reduction of debt by about 2 billion euros, after divestments.
"It is now time for us to focus our efforts on strengthening our retail competitive position, particularly in the United States," noted Ahold president and c.e.o. Anders Moberg in a statement. "We will apply our consumer insight much more actively to improve our product, service, and price offering in order to increase customer loyalty."
About the decision to sell U.S. Foodservice, Ahold said that the division "has the potential to further improve its performance, but we see limited near-term synergies between it and retail operations. Therefore, we have decided to focus our resources anf expertise wholly on the future growth of our retail business." The divestment of U.S. Foodservice will mark the end of Ahold's involvement in the foodservice business.
Regarding the sale of the remaining Tops stores in New York and Pennsylvania, Ahold noted, "Although we are a market leader in these areas, the divestment will allow us to focus our resources on our remaining retail growth businesses." These include Giant-Carlisle, Stop & Shop, and Giant-Landover, all of which "have significant potential for profitable growth." Forty-six Tops stores in northeast Ohio have already been put up for sale.
Ahold also said it would reorganize its current structure into two continentally based organizations, based in the United States and the Netherlands, "in order to improve our customer focus while also driving company-wide initiatives across all of our banners." To that end, the company has appointed two c.e.o.'s, Dick Boer as c.e.o., Europe, and Lawrence Benjamin as c.e.o., U.S. Both will report to Moberg. Benjamin is also the c.e.o. of U.S. Foodservice.