Leadership Changes At Delhaize USA, Ahold’s Giant/Landover Unit

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Updated 9/27/13: Anthony Hucker has been named EVP and chief strategy officer for St. Louis based Schnuck’s Markets Inc., effective September 30.

Original story: Two key industry executives whose businesses have major impacts on the Mid-Atlantic retail food business shortly will be leaving their posts. Exiting are Anthony Hucker, president of Ahold USA’s Giant/Landover unit, and Roland Smith, chief executive officer of Delhaize America.

Hucker will leave Giant/Landover September 13 to pursue a new opportunity. He being replaced on an interim basis by Bhavdeep Singh. During this period Singh will continue his duties as  executive VP-operations for Ahold USA. A search for a successor is currently under way.

As for Roland Smith, who took the Delhaize America CEO job 11 months ago, he resigned after parent company Delhaize Group named Frans Muller CEO of the entire organization (replacing outgoing chief executive Pierre-Olivier Beckers) and gave him the additional responsibility of overseeing all of the Belgian retailer’s U.S. operations on a day-to-day basis. Muller’s appointment becomes effective November 8 (although he will join Delhaize on October 14, three weeks before he officially assumes the CEO position).

Anthony Hucker joined the Landover division in October 2011 from Wal-Mart, where he was corporate vice president and head of Wal-Mart’s express division. He joined the mass merchandiser in 2004 and served in various executive leadership positions there, with increasing responsibilities.

Hucker began his career in the European retail industry as a food industry analyst. He then worked for 10 years with Aldi in leadership assignments in Germany, Austria and the U.S., and as part of the original start up team for Aldi UK.

Singh joined Ahold USA in January 2011. In his most recent assignment prior to joining Ahold, Singh served as chief executive officer for Fortis Healthcare in New Delhi, India. Fortis is a leading health care provider in Asia and is one of the largest private hospital operators in the world. Prior to Fortis, Singh served as chief executive officer for Reliance Fresh in Mumbai, India, India’s largest chain of convenience-style grocery retailers. At Reliance, Singh led a store roll-out plan that saw the organization open 700 new stores in less than two years. Before relocating to India from the U.S., Singh spent several years in diverse leadership positions with The Great Atlantic and Pacific Tea Company (A&P), including business head for A&P’s largest region, and president of the company’s Super Fresh division as well as president of The Food Emporium and Super Foodmart.

Ahold also released its second quarter earnings earlier last month and perhaps an indicator of what was to occur at its Landover unit could be seen in the announcement.

“The Washington area (Giant/Landover division) was impacted by the federal sequester,” Ahold noted in its release.

Ahold said overall sales in the U.S. for the period ended July 14 grew by 2 percent, to $6.1 billion, with same-store sales, excluding gas, up 0.3 percent. Underlying operating income was down 4.1 percent to $256 million.

On a global basis, Ahold’s sales increased to 7.8 billion Euros ($10.3 billion), up 3.0 percent at constant exchange rates; underlying operating income was 338 million Euros ($784.2 million), up 5.4 percent at constant exchange rates; underlying operating margin  was 4.4 percent; operating income 325 million Euros (up 1.32 million Euros); net income  was 206 million Euros ($271.9 million), down 17.3 percent, largely due to the sale of its 60 percent stake in ICA, its former Scandinavian retail entity; and free cash flow 254 million Euros ($335.3 million), including  a 38 million Euro  payment  ($50.2 million related to pension settlements).

In the follow up call with financial analysts, Dick Boer, Ahold’s CEO, noted the company’s Giant/Landover stores in the Washington area have been impacted both by competitive store openings and by “pressure on spendable income in these markets” where there are many government workers. Other company divisions helped offset the weakness in those areas, he added.

Boer also explained, “We see an ongoing strong performance in the Stop & Shop New York Metro division, driven by more effective promotions with strong items and very competitive pricing and a more effective front page of the ad and good communication around these promotions. The other two markets (Giant/Carlisle and Stop & Shop/New England) performed accordingly to what we felt was, certainly in this market, achievable.”

He noted that Ahold USA added 34 pick-up points for its Peapod ordering in the second quarter, bringing the total to 43 at mid-year. Also, Ahold said it is on pace to achieve 40 percent sales share of private label at Ahold USA banners by 2016.

“Currently, we are at 37 percent, which is a big improvement compared to 33 percent just two and half years ago,” said Boer, acknowledging double-digit growth in its Nature’s Promise aisles, now located in 589 stores. “Our business continued to perform well, both in Europe and the United States. We were able to grow sales by 3.0 percent at constant exchange rates with ongoing high levels of promotional activity. Underlying operating income increased by 5.4 percent at constant exchange rates, reflecting a strong underlying operating margin of 4.4 percent. Net income was impacted by the sale of our stake in ICA earlier this year. Our free cash flow continues to be strong at 254 million Euros ($335.3 million) during the quarter. In the United States we saw modest sales growth of 2.0 percent with an ongoing low level of inflation and volumes remaining under pressure in the food retail sector. We are pleased that we continue to gain market share. Underlying operating margin was 4.2 percent, supported by improved sourcing and operating efficiencies. In the Netherlands sales grew by 5.6 percent, mainly driven by new stores and ongoing strong sales growth in our online business. Albert Heijn successfully converted another four former C1000/Jumbo stores, bringing the total to 22 and continued to gain market share. Our growth initiatives remain on track with 16 well-performing stores now open in Belgium and with the completion of the nationwide rollout of bol.com pick-up points in our Albert Heijn stores. Underlying operating margin improved to 5.5 percent, as Albert Heijn’s strong performance more than offset additional pension charges related to decreased discount rates.”

In addressing the still challenging economy, Boer said: “In the current economic environment we remain cautious in our outlook for the balance of the year, as we expect customers to be focused on value and volumes to remain under pressure. We are well on track with our cost saving program and are committed to our ‘reshaping retail’ strategy.

“We remain committed to an efficient capital structure, having already increased our share buyback program to two billion by the end of 2014. We expect to make further announcements in this regard before the end of this year. The new leadership structure we announced this quarter, with an executive committee that represents Ahold’s business and functional leaders at the highest level, will simplify the company’s governance structure and decision-making process and will enable us to accelerate our ‘reshaping retail’ strategy.”

As for Muller, 52, he has more than 15 years of senior leadership experience in retail and the Brussels-based retailers said he brings a strong track record of managing complex, global organizations.

Most recently, Muller served as member of the management board of Metro AG, the Dusseldorf,  Germany-based  international retailing company, and CEO of Metro Cash & Carry, with direct responsibility for approximately 740 stores in 29 countries and annual sales of 31.6 billion Euros ($41.7 billion). His extensive operational experience, from supply chain management to procurement, and proven ability to drive growth will be critical to Delhaize Group’s continued momentum, the company added.

Mats Jansson, chairman of the Delhaize’s board, said: “Frans has the right mix of experience and skills to lead our company into the future and we are pleased to welcome him to Delhaize Group. He brings a deep understanding of global food retailing and we are impressed by his international perspective, operational expertise, and proven ability to grow businesses.”

Muller noted: “I am very enthusiastic to join Delhaize Group. The company is on track with its strategic priorities for the year and is focused on the areas that deliver the highest growth and returns. I am looking forward to leading the company, working with the executive committee and 160,000 Delhaize associates to build on the company’s current momentum.”

Beckers stated: “I am delighted to welcome Frans to the Group. He has all the qualities to lead the company to the next level of its development and I look forward to working with him to ensure a smooth transition.”

While Delhaize announced Roland Smith’s resignation on September 4, he will be available as a senior advisor to Muller until the end of 2013. Following Smith’s departure, the company’s U.S. operations will report to the new Delhaize Group CEO.

Beckers added: “Our U.S. business continues to deliver positive results and we have a solid foundation upon which to build. There is a strong leadership team in place and we look forward to further progress in the U.S. I want to thank Roland for his significant contributions to the success of Delhaize America, particularly the energy and focus he brought to the business. I am pleased that he will be available as a senior advisor to the CEO until the end of the year.”