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AMSTERDAM - Ahold USA Inc., the parent company of six U.S. supermarket chains, has mounted a campaign to reassure suppliers and customers in the wake of a major accounting scandal at parent company Royal Ahold NV, according to an article in the Washington Post.
Since the Dutch parent company announced it had overstated earnings by at least $500 million in the past two years, a small number of suppliers that do business with Ahold's U.S. grocery chains have asked for changes in their payment plans, said Barry Scher, Ahold USA's VP of public affairs.
Ahold USA has sent a letter to its vendors that may be worried about fallout from the scandal and has told store managers to answer any concerns of shoppers.
"The letter was sent to our vendors because we wanted to be proactive, to keep them in the loop," Scher said. "Out of thousands of vendors, only a handful have called us back to address the terms of their payment" even though the grocery store chains have not been implicated in Ahold's problems.
The bulk of the problems had to do with "irregularities" at another U.S. subsidiary, U.S. Foodservice Inc. Last month, Royal Ahold cited irregularities in the way that subsidiary accounted for bonuses it got from its suppliers.
In a letter to suppliers dated Feb. 28, William J. Grize, president and chief executive of Chantilly-based Ahold USA, tried to calm those fears about the retailers, including Giant Food of Landover; Giant Food Stores of Carlisle, Pa.; Stop & Shop Supermarket Cos.; Bi-Lo; Bruno's Supermarkets Inc.; Tops Markets; and Internet grocer Peapod Inc.
"Royal Ahold as a whole, and Ahold USA Retail specifically, are strong cash generators," Grize wrote. "No irregularities were found at Ahold USA Retail, and no changes have taken place in the Ahold USA Retail management team."
In closing, Grize said that the retail side of the business was "surprised" and concerned by the accounting problems. "However we believe that they present only short-term challenges," he wrote.
Stop & Shop is moving ahead with plans to open 20 to 25 new or replacement stores this year, Faith Weiner, director of public and government affairs, told the Washington Post. The Quincy Mass.-based chain has asked store managers and customer service officials at its 335 stores to spend extra time on the retail floor listening to and reassuring customers, she said.
In separate Ahold news, Royal Ahold NV said Tuesday that Dudley Eustace has been appointed interim chief financial officer, effective immediately.
Eustace, a British national, has experience at helping out financially troubled companies, and is familiar with the Netherlands, having been CFO and vice chairman at Royal Philips Electronics NV (PHG) between 1992 and 1999, according to Dow Jones newswires.
As a member of the supervisory board of Royal KPN NV (KPN), he successfully assisted KPN's management board in 2001 when the telecom company almost collapsed under its enormous debt load.
Eustace is currently a non-executive chairman of Smith & Nephew PLC (SNN), a London-based global leader in advanced medical devices. He will continue his duties at Smith & Nephew, while overseeing the financial restructuring at Ahold, the company said.
"My priority is to stabilize the financial fundamentals of Ahold, and to assist in the recruitment of a permanent full-time chief financial officer for the business, hopefully by the end of the year," Eustace said in a statement.
Ousted chairman Cees van der Hoeven and CFO Michiel Meurs have left the company as of Tuesday, Ahold said.