Delhaize Eliminates 500 Jobs as Part of Broad Restructure

SALISBURY, N.C. — The extensive organizational restructuring at Delhaize America continued last week as officials said they would cut another 500 jobs.

The jobs, described as being “above the store manager level,” include 350 current workers and 150 open positions. The company said it would inform employees of the layoffs by Tuesday. The layoffs come in the wake of an executive restructuring announced last month that eliminated 25% of Delhaize’s high-level leadership positions, as well as 45 store closures.

Roland Smith

Roland Smith, Delhaize America’s chief executive officer, in a memo distributed to employees last week announcing forthcoming changes said “many of you will hear that your responsibilities will not change, some will learn about new opportunities and challenges, and some will hear the difficult news that you will be departing the organization. I realize that you may have been anxiously awaiting this news and that potentially waiting another week to learn more may seem like a long time. However, I want to assure you that we’re moving as quickly as possible with this process while still taking the time necessary to ensure our associates are treated with dignity and respect.”

Smith said he would provide additional details of the new corporate structure this week following the layoffs.

Smith, a former Arby’s executive, joined Delhaize late last year and has overseen a rapid and far-reaching restructuring, including new leadership at its U.S. chains Food Lion and Hannaford/Sweetbay and now two rounds of corporate layoffs. Officials said the new structure would allow the company to operate more effectively and efficiently.

“I think it’s a huge hit to the organization, and raises the question of how much did they need to do get in line where they need to be from a [general and administrative] cost perspective to compete in the marketplace,” Neil Stern, senior partner with McMillan-Doolittle, Chicago, told SN. “Between the management changes and the store closures, the indication is this isn’t incremental change, this is a significant restructuring.”

It was unclear last week what the changes would mean to the company’s financial outlook, but Smith in announcing the first round of layoffs said that the organization had failed to meet cost reduction targets it set last year. Delhaize officials in August said declining profits and continued economic slowness would require more aggressive cost reductions than first anticipated.

Much of those savings were to be invested in pricing at Food Lion as part of that chain’s ongoing rebranding effort.

Read more: Delhaize Closing 33 Sweetbays

Officials last month acknowledged the Food Lion investments — which include greater emphasis on service and produce as well as lower everyday pricing — have helped to grow sales at the 703 stores that have received the rebranding initiatives (another 424 stores were awaiting such changes). But profits have declined concurrently.

Delhaize will release fiscal 2012 financial results next month. Officials have said they expect annual profits will be down by around 17.5% compared with 2011.

Officials also indicated that the Sweetbay closures would rid that chain of its money-losing stores, although some observers speculated the closures could make the unit more valuable if Delhaize would consider selling it. Delhaize officials have not indicated Sweetbay is for sale.

“Sweetbay never fit neatly into their banner strategy, and it really never fit that well into its current strategy,” Stern said. “It’s an ongoing question as to what their strategy is there.”

Delhaize employs about 100,000 people.