ZAANDAM, Netherlands -- Ahold here said last week it intends to sell its remaining U.S. convenience store operations, a decision that could foreshadow the sale or closure of some U.S. supermarkets by the company, industry analysts told SN.
Ahold also said it is moving its U.S. headquarters' operations from Chantilly, Va., to an undisclosed location in the Boston area, effective in July. The analysts said this relocation, along with the previously announced combination of back-office operations of the company's Quincy, Mass.-based Stop & Shop and Maryland-based Giant-Landover divisions at the same undisclosed Boston-area location, was essentially a cost-savings measure.
The 204 convenience stores Ahold plans to sell are currently operated by Tops Markets, Buffalo, N.Y., a wholly owned Ahold subsidiary, under three banners: Wilson Farms Neighborhood Stores, with 127 units in western and central New York; Sugar Creek Stores, with 67 units in central and northern New York; and Tops Xpress, with 10 stores in northern New York.
Ahold's decision to exit the C-store industry was not a surprise, observed Patrick Roquas, an analyst at Kempen & Co., Amsterdam. "It's a confirmation that they are focusing on their core business," he said. "It seems logical and in line with being a pure supermarket operator."
Ahold completed the sale of Golden Gallon, its 138-store, Chattanooga, Tenn.-based convenience operation, to The Pantry, Sanford, N.C., in October.
Jens Jantzen, a London-based analyst with Bear Stearns, New York, called the C-store exit "a strategic refocusing." He explained, "What they hope to do is to focus better on normal operations at Tops."
Ahold has been integrating the management of Tops with that of its Pennsylvania-based Giant-Carlisle division.
Roquas added that a possible next step for the company would be to prune its underperforming U.S. supermarket operations, just as the Belgium-based Delhaize group did earlier this month at its Tampa, Fla., Kash n' Karry, subsidiary. "Looking at what Delhaize and other operators have done, they could go through their store base and see where they have less profitable operations, and either close or sell them," he said.
However, Jantzen said he did not see Ahold selling or closing any U.S. supermarkets for at least the next few months, when the company will be more concerned with disposing of its assets in South America and Spain as well as reporting its year-end results.
After that, Jantzen noted, a sale is more possible, particularly a sale of all or part of Ahold's Bruno's, Birmingham, Ala., or Bi-Lo, Greenville, S.C., subsidiaries. "I'm not sure what their reaction will be to continuing negative performance at Bruno's or Bi-Lo," he said. "I'm not sure how high these operations are on the sale list. I think it will not be their next announcement."
Ahold said William Blair & Co., Chicago, has been retained to assist in the C-store sale, for which no time frame has been set, according to Ahold.
Sandy Skrovan, vice president, Retail Forward, a Columbus, Ohio, retail consulting firm, said there are currently many buyers and sellers active in the C-store industry. "In general, we definitely see a redefining of the C-store landscape taking place," she said.
She noted that Alimentation Couche-Tard, Laval, Quebec, made two acquisitions last year that extended its holdings in the United States. In July, ACT bought 43 stores from Clark Retail Enterprises, Oakbrook, Ill., which had been in Chapter 11 bankruptcy protection since October 2002. Then, in December, it acquired the 1,663-store Circle K Corp. from Houston oil refiner ConocoPhillips.
"We could see Alimentation Couche-Tard having an interest in extending to the New York area," Skrovan said.
As for the company's new Boston-area facility, Barry Scher, Ahold USA's vice president, public affairs, told SN it will have a staff of 70 and will combine some functions with those of another office being created in the area for the previously announced combination of the company's Stop & Shop and Giant-Landover divisions.
Of the 100 people he said Ahold currently employs in Chantilly, 35 will be offered positions at the new offices; 20 people employed in human resources-related functions will stay in northern Virginia at another facility; and about 12 will be offered positions at other Ahold divisions, Scher said.
Also, the company said it will close its European Competence Center here, which provided support for its European operations, and combine it into its Netherlands headquarters, effective in March.