Giant/Carlisle Names Herring Replacement – Industry Vet Tom Lenkevich

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A replacement for recently departed Giant/Carlisle president Rick Herring has been named. Industry veteran Tom Lenkevich joined the division of Ahold USA on March 4. He will report to Bhavdeep Singh, executive vice president of operations for Ahold USA. Singh had been serving the role of Giant/Carlisle president on an interim basis following the departure of Rick Herring last month.

Lenkevich will manage all aspects of the division, with responsibility for sales, operating profits, organization and people. He joins Giant/Carlisle with a strong record of retail experience, most recently with Save-A-Lot Food Stores as chief operating officer and senior vice president of retail sales. He has also held positions with other larger retailers, including Meijer and A&P.

On February 6, the Northeast’s largest supermarket retailer announced Rick Herring had retired as president of the Giant/Carlisle division,  effective February 14. Herring had been part of the AUSA organization for nearly 25 years.

Three weeks later, the large international retailer announced that its sales and earnings for its fourth quarter ended December 29 were both down.

Regarding Herring’s departure, Ahold USA COO James McCann said, “We would like to thank Rick for his numerous contributions to our companies, as well as for his leadership, dedication, and years of service. We wish him all the best in this next phase of his life and career.”

Bhavdeep Singh, executive vice president of operations, Ahold USA, will oversee the Giant/Carlisle division on an interim basis until a permanent replacement is named.

Herring joined Giant/Carlisle in 1989 from Pathmark, working in the retailer’s auditing department. In 1996, he was named vice president and controller for Giant/Carlisle before taking the role as vice president of Ahold Financial Services in 2001. He returned to Carlisle in 2003 as CFO and was later named president of the division.

With Herring’s departure, two of the four division presidents that were in place when new Ahold USA COO James McCann replaced the retiring Carl Schlicker last February, have departed.

Anthony Hucker, who was president of Giant/Landover, left last September (he is now executive VP-COO of Schnuck’s in St. Louis) and was replaced by Gordon Reid, who worked with McCann at Tesco. A search is under way for Herring’s replacement.

Other key changes that have occurred since McCann was named to lead the biggest piece of the Dutch retailer’s international holdings include the departure of executive VP-CFO Paula Price (replaced by Dan Sullivan) and the appointment of Jan van Dam as executive VP-supply chain and e-commerce.

For the second consecutive quarter Ahold struggled with its sales and earnings both in Europe and the U.S., this time in its busiest fourth period.

Ahold USA sales, which were originally released in January included an overall sales decline of 2.1 percent and identical store 2 percent (excluding gas). Moreover, U.S. share of market dropped slightly, the first time that has occurred in many years. On the earnings front, underlying operating income dropped from $262 million (4.3 percent of sales) to $243 million (4.0 percent of sales). At the end of 2013, Ahold USA operated 767 stores, five fewer than the previous year. That number included nine stores that were either opened or acquired and 14 units that closed.

Corporately, the parent Ahold organization, based in Amsterdam, experienced a 1.1 volume decrease (based on constant exchange rates). In January, Ahold also restructured parts of its European operation with CEO Dick Boer assuming more direct responsibility for several divisions.

In regards to the company’s financial report, Boer said: “In the fourth quarter our sales remained broadly flat at constant exchange rates, adjusted for the impact of Hurricane Sandy in 2012 and VAT (Value Added Tax) from tobacco sales in the Netherlands in 2013, reflecting a low level of inflation and pressure on volumes. Our underlying operating margin was somewhat under pressure, while our free cash flow remained strong at 0.5 billion euros. In a challenging environment customers remained focused on value and were cautious in their spending, particularly in the second half of the year. For the year we grew sales by 2.0 percent at constant exchange rates and slightly increased market share in all our major markets. Supported by good progress on our cost savings program, underlying operating income remained almost flat at constant exchange rates. Free cash flow exceeded last year’s record at 1.1 billion euros. As a result, the board has proposed a 7 percent increase in our dividend to 0.47 euros, reflecting a payout of 51 percent, slightly above the top end of our dividend policy range. In 2013, we continued to implement our ‘Reshaping Retail’ strategy, leveraging changing consumer needs and pursuing growth opportunities in both existing and new markets. We also continued to rapidly expand our online businesses, achieving strong double-digit sales growth.

“After the successful divestment of our stake in ICA, our shareholders approved a 1 billion euros capital repayment and reverse stock split in an Extraordinary General Meeting on January 21, 2014. We expect to complete the transaction by the end of the first quarter. This is in addition to our 2 billion euros share buyback program that is to be completed by December 2014.

“We remain committed to our financial guidelines for leverage, liquidity and credit rating. Going forward we aim to maintain a balance between investing in profitable growth, returning cash to our shareholders and reducing debt, and we will continue to move toward a more efficient capital structure.

“While we expect economic conditions to gradually improve, we remain cautious in our outlook for the food retail sector in 2014. Our ongoing focus on expanding our online businesses is expected to continue to result in strong sales growth. We will continue to look for ways to simplify our business in order to reduce costs so that we can invest in our value proposition and offer customers a better shopping experience every day.”