4 Strategic Outlook
00 Ahold ANNUAL REPORT 2002 81
BOARD GOVERNANCE HIGHLIGHTS OPERATING REVIEW FINANCIAL INVESTOR REL AT IONS
The following outlook section provides a general framework of our strategic principles, as announced at our General
Meeting of Shareholders on September 4, 2003. We expect to announce further details of our strategy in the fourth
quarter of fiscal 2003.
Two Key Strategic Operational Priorities
Following the events announced on February 24, 2003, and related developments described under "Restatements,
Adjustments and Remedial Actions" above in this section, under the direction of our new Chief Executive Officer and new
Chief Financial Officer, we are now focusing on two key strategic priorities: (1) to be a leading food retailer based on net
sales in selected markets in the United States and Europe, focusing on trade areas where we already have achieved, or
believe we can achieve, such a leading position within a reasonable period of time and (2) to rebuild USF.
- Food retail: We own and operate retail companies that are prominent retail brands in the United States and Europe.
In the markets we serve, we intend to be a leading food retailer based on net sales by focusing on maintaining and
enhancing our local market leadership positions and lowering our cost base. As part of this objective, we also intend
to further integrate, streamline and standardize our operations.
- Food service: We intend to rebuild USF to restore its value following the events announced in February 2003 and
subsequently. To implement this strategic priority, we will manage USF as a single business operating separately from our
food retail trade operations. We are also in the process of installing a new management team at USF. During this period,
our main focus will be to restore profitability of the company through internal initiatives, rather than acquisitions.
Divestments
In November 2002, we announced our intention to divest our non-core operations, either in whole or in part, and
scrutinize our consistently underperforming core operations with a view to improving their performance or divesting them in
an effort to focus on our core businesses and to enhance our positions in markets where we have achieved, or believe we
can achieve, such a leading position. In February 2003, we announced that the scope of this divestment program would
be expanded to improve our consolidated financial statements and enhance our core businesses in stable and profitable
markets. In September 2003, we announced a further expansion of our divestment program and our intention to scrutinize
our portfolio of businesses with a focus on identifying for divestment those operations that do not fit within our new
strategy. We have already begun to withdraw from two continents, South America and Asia, and are in the process of
divesting our non-strategic and non-core assets, including the Golden Gallon convenience store chain in the southeastern
United States.
Principal divestments recently completed or announced consist of the following:
- In December 2002, we announced our intention to divest De Tuinen B.V. ("De Tuinen"), our wholly-owned Dutch natural
products retail unit, and we completed the transaction in May 2003;
- In February 2003, we announced we were engaged in exploratory talks to divest our stake in our Chilean supermarket
activities. In July 2003, we divested our operations in Chile by selling our 99.6% interest in our subsidiary Santa Isabel
to Cencosud S.A.;
- In April 2003, we announced our intention to divest our operations in Brazil (Bomprepo, G. Barbosa and Hipercard
Administradora de Cartao de Crédito Ltda. ("Hipercard"), Argentina (Disco), Peru and Paraguay (Santa Isabel);
- In April 2003, we announced that we had reached an agreement on the sale of our Indonesian operations to PT Hero
Supermarket Tbk ("Hero"). The transfer of assets took place in stages, which began in June 2003 and was finalized in
the third quarter of fiscal 2003;
- In May 2003, we announced that we had reached an agreement on the sale of our Malaysian operations to Dairy Farm
Giant Retail Sdn Bhd, a subsidiary of Dairy Farm International Holdings Limited. The transfer of assets was completed
in the third quarter of fiscal 2003;
- In June 2003, we completed the divestment of Jamin Winkelbedrijf B.V. ("Jamin"), our chain of confectionery stores in
The Netherlands, through a management buy-out;
- In August 2003, we announced that we had reached an agreement on the sale of Golden Gallon, our fuel and convenience
store operation in the southeastern United States, to The Pantry, Inc. The sale was completed in October 2003; and
- In September 2003, we completed the divestment of our operations in Paraguay through the sale of our 100% interest
in Supermercados Stock S.A. to A.J. Vierci.
