Ahold announces long term strategy for U.S. Foodservice
Foodservice operations being reorganized into two customer-focused operating companies.
29/11/05 Ahold announced its long-term strategy for the continued profitable growth of its U.S. Foodservice subsidiary. U.S. Foodservice (the "Company") is the second largest distributor in the foodservice industry with 2004 net sales of USD 18.8 billion.
As part of its new strategy, U.S. Foodservice will reorganize itself into two operating companies, each focused on a specific customer segment ("Broadline" and "Multi-Unit"). Ahold provided unaudited pro forma financial information for the Broadline and Multi-Unit businesses and announced an administrative cost reduction plan and targets for each business through 2008. These targets include driving top and bottom-line growth of the Broadline business and bringing the Multi-Unit business to profitability.
The Broadline operating company represents more than 85% of U.S. Foodservice's net sales and has been its main engine of profitable growth. It provides a broad line of food and related products and services to independent restaurants, healthcare providers, hospitality customers, governmental entities, educational institutions and other foodservice customers. U.S. Foodservice's plans include four initiatives to drive top-line and bottom-line growth of its Broadline business: (1) accelerating private brands penetration, (2) investing in the sales organization, (3) strengthening targeted local geographies and (4) rolling out a comprehensive operational excellence program. Through the first three quarters of 2005, net sales of the Broadline operating company were USD 12.4 billion and the operating margin was 1.1%. The Company is targeting compound annual Broadline net sales growth of at least 5% (compound annual growth) over the next three years and a Broadline operating margin of at least 3% for 2008.
U.S. Foodservice's Multi-Unit operating company, which will be given its own brand identity, provides food and related products to large chain restaurants with multiple units, primarily in the "quick-service" and "casual theme" restaurant segments. Through the first three quarters of 2005, net sales of the Multi-Unit operating company were USD 1.9 billion and the operating margin was negative 0.9%.
The Company announced its objective to bring this unit to profitability within the next two years.
