Dutch retailer Ahold has dubbed the purchase of 50 Czech Spar stores “a strategic purchase”. The move signals the group’s intent to remain active in the Central European market, despite cutting loose its Slovakian branch earlier.
CEO Boer will watch over operations in Czech Republic
The 36 compact hypermarkets and 14 supermarkets, costing 190 million euro, were paid out of Ahold's own funds. The seller was Spar Austria, active in several Central European countries through its Aspiag subsidiary.
Ahold had announced it would sell its 24 Slovakian stores in November 2013, even though they represented a 2012 turnover of 159 million euro. The group stated it wanted to concentrate on its bigger operations in the Czech Republic, but the Slovakian sales made people wonder how the Czech Republic fitted into Ahold’s plans to expand its geographical reach in its current and neighbouring markets.
Ahold reorganized its European organization in January, which meant that CEO Dick Boer now has full control of the Czech operations. He was also responsible for the sale of the minority stake in ICA, but the Czech Republic will be an entirely different matter: it is a fully controlled operation, which Ahold considers to be important for the future. Boer also knows the Czech market quite well, because he started his work at Ahold in 1998 as its Czech country manager.
Less turnover, more profit
The Czech profitability improved 2.1 %, mostly because of more efficiency and lower costs, but also targeted promotions and the fact that its fresh foods were presented much better. Ahold currently has 284 Albert stores in the Czech Republic, with 56 compact hypermarkets. 16 of these hypermarkets were transformed into a new format, dubbed ‘One’.
Nevertheless, Ahold Czech Republic had to incur a 4.7 % turnover loss to 1,445 million euro, even though a lot of this was because of exchange rate fluctuations. The like-for-like turnover for these 284 Albert stores dropped 1.7 %, mostly because of high promotional pressure in this competitive market.
Small purchase with sizeable impact
The relative small purchase has a sizeable impact, because it now has 334 stores (92 compact hypermarkets and 242 supermarkets) and a 23 % market share, making it the second largest Czech retailer behind Schwarz Gruppe (Kaufland, Lidl), but ahead of Tesco and Rewe.
Aspiag board member Rudolf Staudinger has declared in a press release that Spar found it very difficult to get a satisfactory market position in the Czech Republic, but Ahold can simply add Spar’s 6 % to its own market share to become the country’s second largest retailer. Dick Boer also considers this to be the start of an “exciting new fase for Ahold in the Czech Republic”.