Ahold restructuring continues, sales announced
in the US as it continues its streamlining and restructuring
efforts, it emerged this week.
The world's fourth largest food retail and food service group said it has completed the sale of two distribution facilities belonging to its subsidiaries Stop & Shop and Giant-Landover.
The announcement comes just a few months after the company's decision to reduce its US foodservice workforce by 2.4 percent, or 700 jobs, as part of restructuring efforts that will see more than $50 million in charges added to its fourth quarter results.
Earlier this month, a US federal court granted approval for Ahold's $1.1 billion legal pay out to shareholders, compensating them for an overstating of profits two years ago.
The "irregularities" stemming from the 2003 accounting scandal set off a three-year 'Road to Recovery' program, which included a string of streamlining and restructuring efforts, and which is currently in its final stages.
The sale of the two US distribution facilities is part of this 'streamlining' process, said a company spokesperson, adding that the move will help Ahold to "focus and improve our business by improving the efficiency within our brands."
Stop & Shop is to close its North Haven, Connecticut distribution facility by mid-2006, as the company claims the facility is "limited geographically, physically and technologically, preventing us from serving our stores as effectively as we need."
The facility, which has been in operation since the 1960s, was expanded in 1998, at a cost of $40 million. However, the company now says there is no room for further expansion, and closing the plant is the only solution. The distribution of goods currently handled in the facility will be shifted to Stop & Shop's distribution center in Freetown, Massachusetts and to a third party supplier.
And Giant-Landover's Landover, Maryland distribution facility is being sold because the company "simply doesn't need the space," according to vice president of public affairs Barry Scher.
The company, which has "considerably downsized" over the past four years, announcing the closure of three plants last year alone, said the latest move is an attempt to "become as efficient and lean as possible."
The two facilities are being sold for around $90 million to an affiliate of Pennsylvania-based Preferred Real Estate Investments.
Currently more than 70 per cent of Ahold's sales are generated in the US. In November the company reported net third quarter sales for its Stop & Shop/Giant-Landover business- Ahold's largest US retail unit- of $2.9 billion, a 2.7 percent increase from the year-earlier period.
