Dutch retailer Ahold will remain one of the key players in the global retail league when its “Road to Recovery” programme is complete in 2006, despite being a far smaller company in terms of sales, according to industry think tank IGD.
In a new report, IGD predicts that Ahold will generate €49.7bn (US$60.2bn) sales by the end of 2006, and although this represents a 4.5% sales growth in its retail businesses, compared to the company’s stated target of 5%, it will remain a top ten international player.
Ahold is currently ranked number three in the world in terms of turnover, but due to the impact of divestments, which will reduce Ahold’s consolidated retail presence from 12 to five countries, the Dutch retailer is expected to fall three places by 2006. It will still retain a top ten slot at number six, behind Wal-Mart, Carrefour, Metro, Tesco and Kroger.
By the time its recovery programme is complete, Ahold will have reduced its consolidated retail operations to just five markets – the Netherlands, the US, Poland, Czech Republic and Slovakia. This will make it a far more focused business, with stronger corporate controls and a number of strong leading retail chains such as Stop & Shop in the US and Albert Heijn in the Netherlands, and with greater opportunities for savings in back office operations in logistics, sourcing, marketing and personnel. It will also retain non-consolidated operations in Scandinavia and Portugal through its stakes in ICA and Jerónimo Martins Retail respectively, as well as its stake in leading South America retail chains.
“It is not safe to say that all of Ahold’s difficulties are behind it, as it still faces a number of challenges for example in the ongoing divestment process. However, we believe that by 2006 Ahold will emerge a stronger, more integrated global group with a clear focus on its key strengths, and will remain one of the top six global retailers – no mean achievement,” said Louise Spillard, business manager at IGD.
Ahold’s recovery programme is aimed at reducing debt and restoring consumer and investor confidence following revelations in February 2003 of major accounting irregularities, mainly at its US Foodservice unit.