AHOLD'S 2005 PLAN AIMS TO CORRECT EXCESSES OF '90S

David Orgel

Who did Ahold tap as chief executive officer in 2003 when it desperately needed to be repaired and assembled back together again? Logically, it chose a top executive from the home repair and furniture assembly industries.

But even that executive, Anders Moberg, formerly with Home Depot and Ikea, was probably surprised at the amount of work that needed to be undertaken following his arrival in the wake of Ahold's accounting scandal and financial fallout.

Now, almost two years later, Moberg is expressing confidence that the company has turned the corner. He outlined his strategy and view of Ahold's future in an SN story this week (see Page 14). In short, the company has been divesting assets and will focus U.S. investments on rebuilding the smaller number of remaining properties.

Just as interesting is Moberg's view on how Ahold got into trouble in the first place. The accounting scandal at Ahold's U.S. Foodservice division was clearly the precipitating event. But were there deeper problems with the corporate culture? That question has more than historical interest because Ahold can hardly avoid repeating mistakes of the past.

Asked by SN to explain the underlying reasons for Ahold's troubles, Moberg launched into something of a sociology lesson about the prior decade.

"You have to relate to the 1990s," Moberg began. "There was an ambition -- the ambition to grow fast."

Moberg was referring to an era in which Ahold made a large number of its global acquisitions, including Stop & Shop and Giant-Landover in the United States.

"Everything, in a way, was easier in the '90s," he continued. "Banks provided financing without requesting too much. There was ambition from management to be a big player. [Ahold] made a lot of good acquisitions, and some that shouldn't have been done. But it went very well -- to a point. When you don't get the returns, and if you don't integrate, and when it stops, then you run into problems."

Moberg actually had a meeting with former Ahold CEO Cees van der Hoeven in 2003 before agreeing to join the company. That meeting took place shortly after van der Hoeven left in March of that year in the wake of the company's revelation of a $500 million overstatement of earnings from vendor allowances.

"It was important for me to understand what had happened," Moberg said, explaining the reason for his talk with the former CEO. "I tried to get as much information as I could. He was fairly cooperative."

Moberg said he learned that van der Hoeven had recognized the company needed to be steered in a different direction. "I think Cees understood that he had to change the strategy," Moberg said. "But it's very difficult when you have run the strategy one way, to then change and do it a different way. That is probably when one should change management."

Now, back to the future. Moberg can't be accused of having a 1990s-style ambition to overreach. He and his team are determining how a smaller, rebuilt Ahold will look and act in coming years. Moberg would probably be more than satisfied if his "Road to Recovery" helps accelerate Ahold quickly past all the fallout from the earlier era.