Tough six months ahead for Delhaize, says CEO

Last year was a difficult one for supermarket chain Delhaize because of unavoidable restructuring, and the coming six months look like being “very difficult” as well, the company’s CEO, Frans Muller, warned in a speech this week at an event hosted by business magazine Trends.

Delhaize announced its restructuring last summer: In the end, it was less drastic than expected; redundancies numbered 1,800, and 10 stores closed.

The measures were urgently needed, Muller (pictured) told the audience. “2014 was a very difficult year for us in Belgium. Our cost structure here was no longer competitive. Belgium is also the only country where we lost market share in the last quarter.”

Delhaize has a 25% of the market in Belgium. In other territories such as Serbia, Greece and the US, Delhaize is gaining market share. The group has consolidated a total turnover of €21.4 billion and employs 150,000 people worldwide.

The restructuring in Belgium was, he said, was “a really tough measure with a severe social impact. But there are still 12,000 employees who remain, and we want to offer guaranteed their future employment. Delhaize has to become again what it was some years ago: innovative, with a clear profile of its own and modern looking stores. Certainly as far as the last point goes, we still have a long way to go.”

To the disappointment of some of those attending, Muller had nothing to say about the rumoured merger of Delhaize with Ahold, the Dutch company that owns the Albert Heijn chain. The two companies said last month they were in talks but stressed that these were at a very early stage.

News agency Bloomberg, citing sources close to the negotiations, reported that both sides are confident of reaching an agreement this month. According to Bloomberg, the two sides are looking for savings of between €300 and €700 million from a merger, with economies coming in purchasing, logistics and administration. Store closures are being ruled out, since there is little or no geographical overlap between the two. Neither Delhaize nor Ahold has reacted to the Bloomberg report.

Photo courtesy Delhaize Group