Albert Heijn gets new CEO despite good fourth quarter

Albert Heijn now performs better

It was clear that Albert Heijn is struggling, but van der Laan’s departure was still a big surprise especially as Ahold Netherlands managed to present decent fourth quarter results (2.2 % like-for-like turnover growth and larger store park in the Netherlands and Belgium). This means it was probably not a light-hearted decision.

When the company presented its third-quarter results back in November, Albert Heijn was the worst of the class. “The like-for-like turnover dropped 1.1 %, mainly because of lower sales in the Dutch Albert Heijn supermarkets”, it wrote back then. Now, Ahold can announce a fourth quarter market share increase for Albert Heijn, while turnover has grown a lot as well.

Apparently, customers have gone back to Albert Heijn stores in the fourth quarter and especially the Christmas and New Year’s period were very popular as Ahold has explicitly stated. Its online performance was also noteworthy: both Albert Heijn Online and Bol.com have performed well according to Ahold.

Kolk has to give Albert Heijn new impetus

Albert Heijn now faces the challenge to attract these customers outside of the holiday season as well. A repeat of its “Hamstercampagne” will probably not get the job done, which is why it will probably require a fundamental strategic change.

That is what Wouter Kok, Albert Hein’s new CEO starting 1 February, will have to achieve. He worked for Ahold between 1991 and 2007, filling different positions at Albert Heijn, Gall & Gall and Etos.

He was Etos’s general manager when he left Ahold in 2007 to become WE Fashion’s CEO. After 6 years in clothing retail, he returned as Executive Vice President Specialty Stores & New Markets, a position that focused on new opportunities and impetuses, which is something Albert Heijn could use.

Like-for-like yearly turnover still negative

Ahold Netherlands’s positive fourth quarter development has also influenced its yearly result. Its fourth quarter 2.2 % like-for-like turnover growth is a huge improvement on its third quarter 1 % like-for-like turnover drop. Considering the whole year, Ahold Netherlands’s net turnover grew 1.8 %, but its like-for-like turnover is still slightly negative (- 0.5 %).

It still faces tremendous pressure in the United States: its fourth quarter like-for-like turnover only grew 0.3 %, while its full-year turnover remained relatively stable (- 0.1 %). Ahold USA invests the money it saves through its simplicity program into a better fresh product range, more house brand items and lower prices, which is necessary in a highly competitive American market.

Stable margins in US, slightly lower in the Netherlands

Cost-saving measures having offset the investments, Ahold USA expects to keep its fourth quarter operational margin relatively in check with the 3.8 % in its third quarter.

Ahold Netherlands will not be able to do the same, according to its own estimates. Its full-year results will be published on 26 February and will show the full extent of the operational margin drop. “Because of more price deals, we expect the Netherlands to have a slightly lower underlying operational margin in the fourth quarter, compared to its third quarter”, Ahold said in a press release.

2014’s third quarter had a 4.9 % operational margin, which is .4 % lower than in the same quarter of 2013. Ahold said in November 2014 that a lower like-for-like turnover at Albert Heijn was to blame for the drop.