Albert Heijn cuts jobs to compete
Ahold group, is to axe around 440 jobs in a bid to cut costs and
keep pace with its main competitors.
Albert Heijn, the flagship Dutch supermarket chain of the embattled Ahold group, is to axe around 440 jobs in a bid to cut costs and keep pace with its main competitors.
With Dutch consumer spending much lower than in 2002, retailers there have been increasingly dependent on low prices to drive custom. But this kind of price cutting inevitably takes its toll on margins, and Albert Heijn's high personnel costs (it employs 55,000 people in the Netherlands) mean that it has less room for manoeuvre on lowering prices. As a result, the chain has lost market share to its cheaper rivals, prompting the job cuts.
Ahold said that 250 jobs would be cut from the group's HQ in Zandamm headquarters, with the remainder coming from the logistics and distribution units.
Ahold, which is still reeling from the revelation of a major accounting fraud at its US Foodservice unit, is in the process of restructuring its business to try and make up a €1 billion profit shortfall, and the company's new chief executive Anders Moberg is expected to give new details of how it hopes to achieve this aim at a shareholder meeting later today.
So far, the Dutch group has withdrawn from a number of Latin American and Asian markets and sold off several minor Dutch units. Speculation is still growing that it might have to sell off more of its Asian or eastern European businesses, with a number of its main retail rivals waiting in the wings.
The accounting scandal also means that Ahold is still to publish its audited accounts for 2002, and speculation that they might be ready for today's meeting seems unfounded. But the company has issued the results for Albert Heijn and for its main US retail unit Stop & Shop.
Sales at Albert Heijn reached €5.7 billion in 2002, a 5.4 per cent increase on the previous year, while operating profit at the unit rose by 6 per cent to €262 million. Stop & Shop, meanwhile, posted sales of $9.5 billion, up 8 per cent on 2001, and operating profit of $714 million, an increase of 26 per cent.
