Strategy
In early 2006, Ahold's management commissioned
a strategic review of its businesses. The objective
of the review was to define how Ahold could accelerate
identical sales growth, improve profit returns
and strengthen the Company's foundation for future
expansion, and in doing so create additional value
for shareholders.
As a result of the review, the Company announced
its strategy for profitable growth in November 2006:
I. Refocusing the Company's portfolio
Ahold companies will operate as market leaders in local food
retail markets in the United States and Europe where the
Company can secure a number one or number two position
with clear prospects for profitable and sustainable growth.
Ahold's portfolio of retail businesses is fundamentally strong.
The Company has a number one or number two position in
the Netherlands and the Czech Republic, as well as in the
ICA, Giant-Carlisle, Stop Shop and Giant-Landover market
areas. All of these businesses have significant potential for
profitable growth.
Ahold has decided to divest retail businesses that would
require a significant level of investment and management
attention. The Company will now focus on accelerating
improvements across its remaining businesses.
1. Divest U.S. Foodservice
Ahold is pleased with the progress made at U.S. Foodservice
following its decision to retain this business in 2003. Since
that time the Company has created significant shareholder
value. Ahold has improved the company's financial
performance through restructuring and rebuilding the
organization and culture and has resolved the outstanding
material legal matters with significant financial exposure
related to 2003. Ahold's new long-term strategy for U.S.
Foodservice launched at the end of 2005 is showing
good results.
U.S. Foodservice has the potential to further improve its
performance, but Ahold sees limited near-term synergies
between U.S. Foodservice and Ahold's retail operations.
Therefore, Ahold has decided to focus its resources and
expertise wholly on the future growth of its retail businesses.
Ahold will complete its exit from the foodservice industry
by divesting U.S. Foodservice.
2. Focus on the Czech Republic and divest retail
activities in Poland and Slovakia
Ahold will focus its investment in Central Europe on the
Company's leadership position in the Czech Republic.
Although the Czech Republic is a highly competitive market,
Ahold's position and strengthened organization there
provide the Company with the basis for successful growth.
Ahold is divesting its retail operations in Poland and Slovakia
where the Company is not a number one or number two
player. While these two markets are expected to continue to
grow, and offer good long-term opportunities, establishing
a leading position for Ahold would require a significant level
of investment and management attention. The Company
has therefore decided to exit these markets.
3. Divest Tops retail banner in the United States
Further to Ahold's announcement to divest Tops stores in
Northeast Ohio, the Company has concluded that it should
also sell the remaining Tops operation in New York and
Pennsylvania. Although Ahold is a market leader in these
areas, the divestment will allow the Company to focus
resources on its remaining retail growth businesses.
4. Divest minority ownership position in Jerónimo Martins Retail
Ahold has been a 49 percent shareholder in Jerónimo
Martins Retail (JMR) since 1992. JMR has developed into
a successful player in the Portuguese retail market with good
results and strong management. However, as the Company
will focus on retail activities in which it owns a majority
shareholding or is able to drive considerable synergies, it has
entered into negotiations with Jerónimo Martins Holdings,
the other shareholder in JMR, to begin the process of
divesting Ahold's stake in JMR.
5. Continue to retain majority ownership in ICA
Ahold has a 60 percent majority shareholding in ICA, which
has operations in Sweden, Norway and the three Baltic
states. The value of the business has improved significantly
over the past year. Ahold sees further potential in the close
cooperation that exists between ICA and Albert Heijn.
The Company has recently established joint European
sourcing organizations, and is working closely together on
areas including private label development, IT infrastructure
and development and supply chain optimization.
Ahold Annual Report 2006
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