Beckers’ Exit May Signal New Strategy

BRUSSELS — Analysts last week said the retirement of longtime Delhaize Group President and Chief Executive Officer Pierre-Olivier Beckers might portend structural changes at Delhaize.

His departure could “fuel speculation about a potential split between the U.S. and Europe in the future, especially in case the U.S. business does not show a complete turnaround/recovery,” said Patrick Roquas, an analyst with Rabobank, Amsterdam, in a report.

Delhaize, which operates the Food Lion, Hannaford Bros., Sweetbay and Bottom Dollar Food banners in the U.S., has been seeking to revive those businesses after a recent slowdown in sales momentum. It also operates in Europe and Indonesia.

Beckers announced his planned retirement as the company reported first-quarter financial results.

“After serving Delhaize Group for 30 years, of which nearly 15 years as CEO, I did not make this decision lightly,” Beckers told analysts in a conference call. “I can assure you that my energy level is absolutely intact. Nonetheless, the board of directors and I have agreed that the time is right to move forward into a succession plan.

“I have always been transparent and outspoken about my conviction that no one should have a sort of divine and permanent right to his or her job, and so this applies to me as well. I have said that it is healthy and important, from time to time, for a company to install a new person at the top, someone who will bring new thinking and a fresh pair of eyes to the realities, the challenges, and opportunities facing the company.”

Delhaize said Beckers will stay in his post until a new CEO is appointed “and a smooth transition has taken place.” He will continue to serve on the board after stepping down as CEO.

Beckers joined Delhaize Group in 1983 and was appointed president and CEO in January 1999. Since 1999, the number of stores has grown from 1,904 to 3,411 and revenues have grown from about $17 billion to almost $30 billion.

Delhaize said its board of directors is conducting a search for a successor and will consider both internal and external candidates.

In a report on just-food.com, analysts were quoted as mixed on whether the company would be more likely to choose an internal or external successor.

Fernand de Boer of Petercam was quoted as saying the search for a new CEO was a “logical next step in the reshape of the company,” and that he expects Delhaize to hire someone from outside the company with “broad continental experience.”

Meanwhile, Delhaize said trends in the U.S. improved in the first quarter.

Underlying U.S. operating profit rose 14.1%, to $197 million, in the first quarter, compared with year-ago results. Underlying operating margins were 4.2% of sales in the U.S., vs. 3.7% last year.

“This was boosted by favorable weather conditions, cost savings, lower losses at Bottom Dollar Food and the benefit from closing under-performing stores,” said Beckers.

The company said it “invested over 80 basis points in sales prices” in the U.S., although that investment was “mitigated by improved supplier terms.”

At Food Lion, the company plans to “go live” with phase four of its repositioning effort this week in the Baltimore and Washington markets.