EDLP Gains Traction at Ahold USA

MARK HAMSTRA

AMSTERDAM — Customers are “responding positively” to the new EDLP initiatives at Stop & Shop and Giant-Landover, said Anders Moberg, chief executive officer of the chains' parent company, Ahold, in an interview with SN last week.

“We are optimistic about the changes in price at Giant-Landover and Stop & Shop, and about the future,” he told SN following the company's year-end earnings conference call with analysts.

The company, based here, has been rolling out the EDLP initiative department by department, following a similar rollout at the company's chains in the Netherlands and Scandinavia.

He also said the efforts to divest both the Tops chain, based in Buffalo, N.Y., and the U.S. Foodservice distribution business, based in Columbia, Md., are “well under way” and that there has been considerable buyer interest in both businesses.

At Tops, he said, the company is “coming up to the bid process” and has fielded interest from parties interested in buying the whole chain as well as some who are interested in buying specific locations.

“There is a combination of interest,” Moberg said.

Asked about whether Ahold might participate in any further consolidation in the Northeastern U.S., where A&P recently agreed to acquire Pathmark Stores, Moberg said the company is not interested in any large acquisitions but could consider buying up individual store locations or small chains in its operating areas.

“Our main focus right now is to work on the re-engineering of Stop & Shop and Giant-Landover, working on the offer, changing prices and so forth,” he said. “That remains our priority, but having said that, we will continue to look at fill-in acquisitions that fit into our plans.”

Ahold said it took a $118 million charge in the fourth quarter for the sale or closure of its 46 Tops stores in northeastern Ohio. As a result, the company's Giant-Carlisle-Tops division posted an operating loss of $63 million in the period. For the year, the division had operating profit of $62 million, down $28 million from a year ago.

The Stop & Shop/Giant-Landover division also saw declines in operating margins, which were impacted by the new price reductions, the company said. Fourth-quarter operating profit in the division was $162 million, down $18 million from year-ago levels. For the full year, operating profits totaled $839 million, down $15 million from a year ago.

Ahold reported sales results on Feb. 1.