PEAPOD ADJUSTS TO NEW MAJORITY OWNER

JON SPRINGER

CHICAGO -- Peapod here will spend the next few months revising its business plan as it comes under the wing of new majority owner Ahold, which has named Marc van Gelder chief executive officer of the on-line grocer.

Van Gelder, 38, joined Peapod from Ahold's Quincy, Mass.-based Stop & Shop division, where he was senior vice president of supply chain management and logistics. Three other Ahold executives -- Ahold chief financial officer Michael Meurs, Stop & Shop CEO William Grize and Tops Supermarkets CEO Steve Oldland -- also joined the Peapod board.

The appointments were the first since Ahold said in April it would pay $73 million to acquire 51% of Peapod. The buyout came as Peapod teetered on the brink of insolvency following the sudden resignation of CEO Bill Malloy in March.

Van Gelder said Peapod would focus on implementing "fast-pick" centers at Ahold-owned grocery stores in the Northeast. Ahold developed the strategy partly as a result of its partnership with Peapod at Stop & Shop, van Gelder said.

"We're going to put a strategic plan together within 90 days," van Gelder said in an interview broadcast on-line. "We're going to evaluate the various aspects of business. Our number one business objective is to build a company with the strongest metrics and the most profitable business model."

In the meantime, Peapod's previously announced plans to build new warehouses in Dallas and San Francisco are on hold, and its future is uncertain with supermarket partners in Texas and in Columbus, Ohio, said Andrew Parkinson, Peapod's co-founder and chairman.

Peapod has received notice that Randall's Food Markets, Houston, would not renew its partnership with Peapod. Randall's, a division of Safeway, Pleasanton, Calif., was Peapod's grocery partner in Austin, Houston and Dallas-Fort Worth. Safeway, however, last month announced a strategic alliance with Dallas-based GroceryWorks.com.

Peapod partners with Kroger stores in Columbus. Peapod previously said it would abandon its store partnerships in favor of warehouse-based models.

The company will continue to operate its newly opened warehouse in Chicago, Parkinson added.

Despite the harrowing circumstances this spring, Peapod managed to increase sales 38% to $24.9 million in the 13-week first quarter ended March 31. Its losses accelerated to $12.7 million, as compared to $5 million. Excluding extraordinary expenses, Peapod said its loss was $8.6 million, or 47 cents a share. Analysts expected a loss of 46 cents, according to First Call.