Ahold USA Finding Leverage With Vendors

ELLIOT ZWIEBACH

AMSTERDAM — As Ahold here continues to reduce pricing and inventory levels at two of its U.S. chains, it is gaining an edge in dealing with vendors, Lawrence Benjamin, president and chief operating officer of the U.S. operations, said yesterday. “The threat of discontinuing SKUs is an enormously powerful point of leverage with vendors,” he said during a conference call with analysts, “and our negotiations with them involve telling them that if they remain with us, we will give them growth. But somebody has got to go, and so we have our own sort of reality show where somebody has to get off the island, and that’s what we present to every competitor, and it’s very, very effective.” Since introducing a Value Improvement Program at Stop & Shop, Quincy, Mass, and Giant Foods, Landover, Md., in September 2006, Ahold has discontinued approximately 25% of the items it used to carry while simultaneously adding new products, Bejamin said. The U.S. operation will continue to rationalize its store base, he added, “[because] in simplifying our business, we want to make sure we focus most of our attention on high-performing stores and not give all our time and attention to the underperforming portion.” Ahold said yesterday net income for the fourth quarter, which ended Dec. 30, rose 9.2% to $402.6 million, and was up 222.2% to $4.5 billion for the year. As previously reported, Ahold’s total sales rose 0.2% to $10.1 billion for the quarter and 1.2% to $43.4 billion for the year.

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