MINNEAPOLIS — Three years after engineering one of the biggest mergers in the history of the supermarket industry, Jeff Noddle last week said he would step down as chief executive officer of Supervalu, based here.
Named to succeed him was Craig Herkert, a 23-year veteran of Albertsons and American Stores who most recently had been an executive in Wal-Mart's International division.
“As we approach the end of year three of our company's transformation and as I begin planning for retirement, the time is right to lay the groundwork for continuity of leadership through the next phase of our journey,” Noddle, 62, said in a prepared statement, referring to the ongoing integration of Supervalu's 2006 acquisition of Albertsons. He will remain executive chairman for at least a year, the company said, and will continue to serve on the board.
He was not available for comment to SN last week.
Supervalu said an exact start date for Herkert, who is 49, had not yet been determined.
Herkert has been president and CEO of the Americas division at Wal-Mart since 2004, overseeing Canada, Mexico, and Central and South America. From 2000 to 2003, he was senior vice president and chief operating officer of Wal-Mart International, responsible for international merchandising, marketing and operations. Prior to joining Wal-Mart, he spent 23 years with the American Stores and Albertsons companies. At the time of his departure from Albertsons in 2000, he was executive vice president of marketing. He had previously served as president of Acme Markets and started his grocery career at a Jewel-Osco store in Chicago.
Some analysts said they believe Supervalu's board had been disappointed with the company's performance in the wake of the acquisition, as sales growth lagged behind some rivals and earnings have been weak. As of late last week, the company's share price was down about 43% since the Albertsons deal was announced.
“His performance clearly had not been stellar,” said Karen Short, an analyst at Friedman, Billings, Ramsey & Co., New York. “Something had to give.”
Gary Giblen, an analyst at Goldsmith Harris, New York, said he believes the company's board and some shareholders have been pushing for a sale of some portion of the company, and Noddle might have been resistant.
“I believe overnight they could sell Shaw's and Save-A-Lot, and I believe there have been expressions of interest for those,” he said.
The sale of some assets would reduce debt and help focus management attention on other areas of the business, he explained.
Short of FBR said she did not believe that Noddle had been averse to asset sales, although she said the company could opt to sell some parts of its business to pay down debt. She suggested the Albertsons stores in Southern California would be the prime candidates for an asset sale because they could generate the most proceeds at this point.
Other analysts previously had suggested that Supervalu could seek to spin off either its wholesale business or its Save-A-Lot banner.
Deborah Weinswig, an analyst at Citigroup, said she was “pleasantly surprised” with the appointment of Herkert.
“We believe Craig is an excellent choice for the position with his extensive experience in food retailing and supply chain management coupled with his previous experience at Albertsons and Jewel-Osco. Additionally, in his previous role as president and CEO of the Americas at Wal-Mart, we believe Craig was responsible for driving profitable growth in Wal-Mart's best-performing region.”
According to a report in the Wall Street Journal last week, Herkert may have a “non-compete” agreement with Wal-Mart that precludes him from working for certain competitors, but one executive recruiter, who asked not to be identified, told SN that Supervalu probably worked out an agreement to resolve that issue.
“Non-competes strip you of your stock and long-term incentive programs should you violate the terms,” the recruiter told SN. “So, some agreements allow you to break the contract and in return lose these incentives. At times the hiring company will help to make you ‘whole’ on what is lost. I suspect this is what has taken place.”
Supervalu was quoted as saying it expects Herkert to begin during Supervalu's current fiscal first quarter.
In addition to being a “chief architect” of the Albertsons acquisition, Noddle is also credited with reshaping Supervalu's supply chain structure “to become increasingly effective through regional realignment, systems standardization and state-of-the-art technology enhancements,” the company said.
Noddle is a 33-year Supervalu veteran. He has been CEO since 2001 and chairman since 2002.
