Ahold USA

About Ahold USA

1385 Hancock Street, Quincy, Mass. 02169
www.aholdusa.com | 781-380-8000 | Founded: 1988

Industry: Retail | Category: Major Employers Not Based in the Region

Ahold's stateside operations have been on the rocks since a financial scandal in 2003 in which the company admitted it had overstated profits at U.S. Foodservice. The merger of Giant and Stop & Shop that followed has been beset by technical problems, mismanagement and low employee morale. High labor costs and competition from Wal-Mart Stores Inc. are driving sales declines at its Tops stores in Ohio.
There has been some stabilization over the past year. Ahold spent $1.1 billion to settle a securities-fraud class-action lawsuit stemming from the accounting irregularities at U.S. Foodservice and announced that it would split the subsidiary into two units in an effort to boost profits. Ahold also has worked to reclaim lost market share in the Washington area, investing in remodeling Giant stores and building new prototypes. According to the trade publication Food World, Giant owned 132 stores in the Washington area in 2005. Its market share dipped last year to 40 percent from 42.1 percent in 2004. It was still far ahead of Safeway, which ranked second with a market share of 27 percent.
Stop & Shop and Giant Food chief executive Marc E. Smith traveled to the region twice to smooth over relations with employees. But every step forward seems accompanied by one back. Year-end sales at Giant and Stop & Shop remained sluggish. Then in February of this year, Smith abruptly announced his retirement. Meanwhile, the changes at U.S. Foodservice resulted in about 700 job cuts in the Washington region. In early April, Jose Alvarez, a supermarket industry veteran who had been in charge of the division's supply chain and logistics operation since 2001, was named to replace Smith.
Predictions about Ahold's future remain cloudy, analysts say. Its financial situation should improve quickly, but sales will likely take longer to rebound. Still, the company's U.S. divisions remain competitive and have held onto much of their market share.
"Ahold is a much more focused company versus a few years ago," wrote Fortis Bank analyst Robert Jan Vos. "Solving the remaining small issues could support the investment case further."

CFO: Bob Fishbune

2005 Financial Data

Total employees: 127,000 | Local employees: 17,365