May 2, 2007
Moberg Steps Down at Ahold
When Anders Moberg joined Royal Ahold four years back, he was brought in to stabilize a company that was going through the fallout from a nearly billion dollar accounting scandal at U.S. Foodservice and, at the same time, struggling in its grocery operations against stronger competition.
While Mr. Moberg was able to bring some calm to the situation early in his tenure, he was never able to truly right the ship. He has sold off some international assets to reduce debt and has put U.S. Foodservice and Tops Markets up for sale. Still, the company’s U.S. retail business continues to struggle and calls have been made by Centaurus Capital and others for Ahold to sell off chains and maximize shareholder value.
Last week Mr. Moberg unexpectedly resigned from the company after he and the board apparently came to the conclusion that the soon to be former CEO had taken Ahold as far as he could. Mr. Moberg is to officially step down on July 1.
René Dahan, chairman of Ahold’s Supervisory Board, said in a press release, “Anders has made a great contribution to restoring the health of Ahold. With this achieved, and the strategy for Ahold’s future profitable growth in place, now is a good time for new leadership to be appointed to take the company through its next set of challenges and opportunities.”
For the short-term, at least, John Rishton, Ahold’s chief financial officer, will attempt to put the company back on the growth track. Mr. Rishton will take over as acting president and CEO of Ahold on July 1. He will also continue in his role as CFO. A final decision on a permanent leader for the company is expected by the end of the year.
Discussion Questions: Can Ahold get its U.S. businesses turned around? What will it take to do so?
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Ahold announced the $7 billion sale of U.S. Foodservice today. The stock price is $13.65. A year ago (and 2 years ago) it was $8, so Mr. Moberg did a great job. How many of today’s shareholders bought Ahold at $3 early in 2003? A few months before that it was $23. Who says supermarket stocks are boring? Some investors make more money buying and selling the stocks than the companies make operating supermarkets. Ahold supermarkets aren’t the ones everyone talks about or emulates, but it’s clear that investors appreciate this company’s performance.
I shop primarily at Giant, a major Ahold property with a major market share in Baltimore-Washington, one of the fastest growing and wealthy demographics in the US. Giant is a competent, value-oriented retailer. I’ve learned that I can rely on Giant to be in stock on key items, provide an efficient shopping experience, and consistent price value.
But, Giant is void of soul. It is boring. Innovations are extremely rare. Managers are harried and operationally focused.
These are not good attributes in a market where powerful new players are gaining share. Wegmans is awesome and constantly fresh with an obvious service oriented culture. Whole Foods’ assortment is even more impressive. Trader Joe’s is clever and innovative. Wal-Mart is operationally better than Giant and has lower prices.
Giant is getting squeezed in all directions. People tell me that Giant used to be a great company to work for before Ahold robbed it of its soul.
Ahold, maybe you should think about retreating.
Great retailing does not flower constantly just because new gardeners take over tending the plants/stores. Giant (Landover)in Izzy Cohen’s and Joe Danzanski’s era was the Pride of the Potomac and Stop & Shop got great review during the era of the Rabbs. When their successors took over these companies lost much of entrepreneurial talent and were eventually sold. Today, the question is can the present gardener, Ahold, make these and their other U.S. properties bloom again in their respective marketplaces?
With the damage done to company morale by the scandal at U.S. Foodservice; with several of their properties up for sale; with the specter of new competition; and no longer with the quality team building skills of former Ahold U.S. CEO, Bob Tobin–it doesn’t seem like a treat for the Dutch. We sincerely wish interim chief, CFO John Rishton, “good luck” with his additional responsibility, but–from here–it looks like the bloom may be fading Ahold’s U.S. rose garden.
Turnaround? Probably not. They can, however, divest stores the same way they have been doing over the past few years and get them in more capable hands. BI-LO, Bruno’s, and Tops-Ohio have been discarded or sold off. Tops-New York is on the block. The two Giant divisions are being squeezed hard between Wegmans and Wal-Mart and may soon deteriorate the same way Tops and BI-LO did. So that’s going to turn out badly for them. Stop & Shop still has the benefit of having mediocre competitors such as A&P, Pathmark, and Shaw’s. As Wegmans, Price Chopper, and Wal-Mart make a continued push into New England, it won’t be Stop & Shop falling first. I don’t know if it’s just me, but the Stop & Shop stores seem to be the best run of all of the Ahold stores. I think the shareholders would prefer Ahold sell off the stores rather than continue to operate them. Except for Stop & Shop, I don’t see any upside to hold on to the stores.
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Ahold announced the $7 billion sale of U.S. Foodservice today. The stock price is $13.65. A year ago (and 2 years ago) it was $8, so Mr. Moberg did a great job. How many of today’s shareholders bought Ahold at $3 early in 2003? A few months before that it was $23. Who says supermarket stocks are boring? Some investors make more money buying and selling the stocks than the companies make operating supermarkets. Ahold supermarkets aren’t the ones everyone talks about or emulates, but it’s clear that investors appreciate this company’s performance.
I shop primarily at Giant, a major Ahold property with a major market share in Baltimore-Washington, one of the fastest growing and wealthy demographics in the US. Giant is a competent, value-oriented retailer. I’ve learned that I can rely on Giant to be in stock on key items, provide an efficient shopping experience, and consistent price value.
But, Giant is void of soul. It is boring. Innovations are extremely rare. Managers are harried and operationally focused.
These are not good attributes in a market where powerful new players are gaining share. Wegmans is awesome and constantly fresh with an obvious service oriented culture. Whole Foods’ assortment is even more impressive. Trader Joe’s is clever and innovative. Wal-Mart is operationally better than Giant and has lower prices.
Giant is getting squeezed in all directions. People tell me that Giant used to be a great company to work for before Ahold robbed it of its soul.
Ahold, maybe you should think about retreating.
Great retailing does not flower constantly just because new gardeners take over tending the plants/stores. Giant (Landover)in Izzy Cohen’s and Joe Danzanski’s era was the Pride of the Potomac and Stop & Shop got great review during the era of the Rabbs. When their successors took over these companies lost much of entrepreneurial talent and were eventually sold. Today, the question is can the present gardener, Ahold, make these and their other U.S. properties bloom again in their respective marketplaces?
With the damage done to company morale by the scandal at U.S. Foodservice; with several of their properties up for sale; with the specter of new competition; and no longer with the quality team building skills of former Ahold U.S. CEO, Bob Tobin–it doesn’t seem like a treat for the Dutch. We sincerely wish interim chief, CFO John Rishton, “good luck” with his additional responsibility, but–from here–it looks like the bloom may be fading Ahold’s U.S. rose garden.
Turnaround? Probably not. They can, however, divest stores the same way they have been doing over the past few years and get them in more capable hands. BI-LO, Bruno’s, and Tops-Ohio have been discarded or sold off. Tops-New York is on the block. The two Giant divisions are being squeezed hard between Wegmans and Wal-Mart and may soon deteriorate the same way Tops and BI-LO did. So that’s going to turn out badly for them. Stop & Shop still has the benefit of having mediocre competitors such as A&P, Pathmark, and Shaw’s. As Wegmans, Price Chopper, and Wal-Mart make a continued push into New England, it won’t be Stop & Shop falling first. I don’t know if it’s just me, but the Stop & Shop stores seem to be the best run of all of the Ahold stores. I think the shareholders would prefer Ahold sell off the stores rather than continue to operate them. Except for Stop & Shop, I don’t see any upside to hold on to the stores.