AHOLD WILL FOCUS ON BI-LO IN 2002

ELLIOT ZWIEBACH

ZAANDAM, Netherlands -- Ahold here plans this year to focus on improving operations at Bi-Lo, its retail operation in the Southeastern United States, Bill Grize, president and chief executive officer of Ahold USA Retail, said last week.

"We really need to get our act together [at Bi-Lo] and become a bit more focused," Grize said. "We've lost some focus there, but with new management, we think we'll be running on all cylinders by the middle of the year."

He told SN that Bi-Lo, Greenville, S.C., will focus more on pricing, promotions and controlling margins.

Grize made his comments during a conference call that followed release of Ahold's sales results for the year ended Dec. 31, which showed Ahold's total volume up 27% to $59.4 billion (U.S.), with U.S. sales -- encompassing retail and food service -- also up 27%, to $35.3 billion, or approximately 59% of the company's total sales.

Ahold said it expects to report full sales and earnings results for fiscal 2001 and the fourth quarter on March 7.

The company said retail sales for the year rose 6.5% to $23.2 billion, encompassing volume from 1,600 stores, including Bruno's Supermarkets, Birmingham, Ala., which Ahold acquired Dec. 12, while food-service sales jumped 103.6% to $12.1 billion for the year, encompassing a full year of U.S. Foodservice sales, the acquisition of PYA/Monarch at the end of 2000 and the acquisitions of Mutual and Parkway in 2001, plus one month of sales of Alliant Foodservice, Deerfield, Ill., which Ahold acquired in December.

The company said organic food-service sales in the United States rose 10.8% for the year, although organic growth after Sept. 11 was 7%.

Among the company's retail stores, comparable-store sales for the year rose 3.1% for the year and 1% for the quarter, while identical-store sales were up 2.6% for the year and down 0.4% for the quarter, the company said. Cees van der Hoeven, chairman and CEO, said the drop in identical sales in the quarter "may have been very disappointing but they were up against a very strong quarter in the prior year."

In addition, the quarter was impacted by several factors, including a shift in the New Year's Eve holiday, van der Hoeven pointed out. "Identical-store sales for the first week of 2002 were up 15%, due in large part to that shift," he explained.

Van der Hoeven said all U.S. retail operations had positive identical sales for the year except Bi-Lo, "and we are taking focused action there to improve the situation."

In his remarks, Grize contrasted the results at Bi-Lo with those in Ahold's other U.S. retail operations.

"The Washington, D.C., market [where Ahold operates Giant Food] softened up after Sept. 11, despite a very strong market share, as tourism dropped off and more layoffs occurred.

"In Buffalo [where Ahold operates Tops Markets], the economy is weak, but Tops was the best-performing company in the fourth quarter.

"Things are status quo at Giant Food [Stores] of Carlisle [Pa.], which is generating a healthy market share, though identical sales leveled off against very strong gains in the prior year.

"At Bruno's, we're pleased with what we see. We like the numbers we're generating, and we like our prospects for the first quarter."

He did not mention Ahold's Stop & Shop operation, with stores in New England and the Mid-Atlantic, in the discussion.

In response to a question, Grize said Ahold "is relieved not to see much trading down or shifts in basket sizes after Sept. 11. We are seeing more price sensitivity right now, but it's not a systemic change, and despite the economy and the drop in consumer confidence, we feel better now than we did two months ago.

"So our budgets are more cautious and our sales expectations are more modest. We're making sure we're priced right in all markets -- we're not taking chances this year -- and we're off to a good start to meet our first-quarter sales numbers."

On the food-service side, Jim Miller, president and CEO of Ahold's U.S. Foodservice division, said the company saw some softening of sales after Sept. 11, "but while the industry in general had negative growth of 4% to 5%, we grew at 7% [during the last three and a half months of the year] after growing at double-digit rates before the event."

What's prevented U.S. Foodservice from growing faster, Miller said, is the events of Sept. 11, not the economy.

"Some of our markets are doing well while others are in various stages of recovery," Miller said, "but we're growing and taking market share from competitors."