New CEO Smith Doesn’t Take Long To Shakeup Delhaize
You knew the explosion was coming, but you may not have figured it would happen this quickly. Beleaguered Delhaize America (DA), which operates approximately 40 Bottom Dollar Foods units in the Delaware Valley, has had a very difficult time of it the past two years. With Roland Smith, Delhaize America’s new CEO (he replaced the now retired Ron Hodge in October) now at the helm, the former foodservice executive didn’t wait long before blowing up key parts of the company’s senior management team.
Effective December 7 (a real day of infamy), Cathy Green Burns, who was president of DA’s large Food Lion unit, has left the organization and Beth Newlands Campbell has been named president of the Food Lion unit. Newlands Campbell was most recently president of DA’s Hannaford unit based in Scarborough, ME. She will relocate to Food Lion’s headquarters in Salisbury, NC and will now have responsibility for 1,127 Food Lion stores in 10 states, 73 Harveys units in Florida, Georgia and South Carolina and 11 Reid’s stores in South Carolina.
Additionally, Brad Wise, former senior VP-human resources for DelhaizeAmerica, was named president of Hannaford and Sweetbay. And Mark Doiron, veteran Hannaford executive, who since 2010 has served as chief supply chain officer for DA, has left the firm.
Smith, the former Wendy’s and Arby’s CEO, clearly has many challenges to tackle as the company has struggled with earnings and identical store sales, particularly at its large Food Lion unit, which comprises about 65 percent of Delhaize America’s sales.
The changes were first revealed in an internal memo sent by Smith on December 6. He noted that he was streamlining the organization to “provide clarity of responsibility and accountability for the newly formed Delhaize America Leadership Team (DALT).”
The memo also stated that “although it’s early in my tenure, I have had hundreds of significant and substantial conversations and interactions with trusted leaders across the organization. I mention this only to say that these decisions and moves were made with a great deal of input.” Smith writes that “through hours of one-on-one conversations, pages of written correspondence, and informal exchanges, I have explored both thoroughly and quickly what can be done to realize the potential of our business.”
Delhaize America is also creating a temporary strategic task force which will be responsible for developing a Delhaize America vision and strategy, clearly defining key critical priorities for 2013 and beyond, establishing operating principles and building the right structure throughout the organization to ensure and simplify accountability.
“The full composition of the strategic task force will be announced in the coming weeks,” Smith stated in his memo. However it is important to note at this time that Robert Canipe, who has served as Delhaize America CFO since 2010, has accepted a role with this group.”
Smith also says that a search has begun for an executive to fill the “chief people officer” position at Delhaize America.
In speaking of Cathy Green Burns, Smith stated: “Cathy has been a tireless and trusted DelhaizeAmerica associate for nearly 30 years, rising from a bagger in Bangor, ME, to the top leadership position of our largest banner. Along the way, she held senior leadership positions in merchandising, distribution and operations at both Hannaford and Food Lion before becoming chief operating officer at Food Lion from 2005 to 2010. She became the president of Food Lion in 2010. Cathy is known for her graceful, caring manner and broad understanding of the grocery industry. I appreciate her vast contributions to the organization and the lasting relationships she has built throughout her career.”
His comments about Doiron were: “Mark has dedicated his career to building Delhaize Americainto a world-class organization after starting with Hannaford in 1985. After serving as a category manager, Mark took on advanced leadership roles throughout Merchandising, achieving the position of executive VP, Hannaford merchandising, distribution and IT in 2008. Mark has served Delhaize America’s chief supply chain officer since 2010. Mark is known for his ability to understand large systems and build teams to support complex processes. His contributions across many years and many departments within the organization are appreciated.”
While Delhaize America has shifted to a modified centralization plan over the past two years, Smith clearly is considering further consolidation (perhaps DA’s new “centralized” model, partially created by Doiron that features a “Preferred Broker Network,” isn’t working that well).
Smith added: “I want to share with you my thinking on the question of whether we consolidate and/or relocate our corporate support services functions (formerly known as shared services). After a great deal of consideration regarding the future of our business, I have decided that centralizing these functions into one location is not a top priority at this time. That said, I and a vast majority of the leaders with whom I’ve spoken continue to believe that a central location for corporate support services is critical and necessary to strengthening our organization. However, there needs to be a demonstrable benefit to our business and our bottom line before implementing plans to consolidate corporate support services. Also, we need to stabilize our business and complete our reorganization plans before causing the significant disruption for associates that moving would entail and spending the millions of dollars necessary to facilitate such a major move. We will begin exploratory analysis about consolidating support services in late 2013 or early 2014. However, for the purposes of meeting our immediate needs, my intent is to relocate my team of direct reports and a select group of their key leaders to North Carolina. One notable exception is Brad Wise, who will lead Hannaford and Sweetbay from Maine.
“Over the next few weeks, my new team and I will focus on refining our business strategies and building the right structures to refocus, execute, and succeed. Similar to my personal entry into the organization, we intend to move quickly in making decisions and setting the right direction for Delhaize America so we can take action to improve our position in the marketplace. In that spirit, we are committed to communicating the next level of structural changes within the first six weeks of 2013,” Smith concluded. “I appreciate that this is a lot of complex and potentially emotional information to process. While it represents significant change for the organization, this work raises my confidence in the future of Delhaize America. I believe that this structure, team of talented leaders, and focus on clear priorities represents a solid foundation for future success. However, I firmly believe the success of Delhaize America will ultimately be driven by your continued hard work and commitment to excellence.”
Cathy Green Burns was at the forefront of Food Lion’s “rebranding” program which began in 2011. The repositioning effort was designed to upgrade Food Lion’s store base while also expanding perishables departments and offering a new private label brand to its consumers. About 75 percent of the stores have been upgraded to date with the remaining units (including those inDelaware,MarylandandPennsylvania) to be remodeled next year.
Other changes in the shakeup include the following personnel changes: Mike Vail, the former president of Delhaize’s Tampa, FL-based Sweetbay chain, was named chief supply chain officer for Delhaize America; Greg Amoroso, formerly senior VP for the business service center and sustainability, was named chief financial officer of Delhaize America; and David Criscione will assume the role of chief strategy and development officer, Delhaize America. He most recently was senior VP-strategy, marketing and business development, at Hannaford.
Despite results which several analysts have termed as mediocre, Bottom Dollar, which opened its first Del-Val store (King of Prussia, PA) in 2010 and has since expanded its geographic presence to the Pittsburgh-Youngstown market, there will be no management changes at the extreme value unit. Meg Ham will remain president.
Other senior level executives who will remain in their current positions include Linn Evans, senior VP-legal and government affairs for DA; and Deborah Dixson, who will remain chief information officer for DA.
Delhaize America, a unit of Brussels based Delhaize Group, has struggled with its bottom line and saw its 2011 profits and ID revenue drop.
Of course, there are those who believe that Delhaize America waited much too long to improve key aspects of its organization (especially price, service and selection at its dominant Food Lion banner) and that even a successful Bottom Dollar Foods won’t be nearly enough to offset the steepness of the mountain that DA will have to climb to be successful again. And when you throw in the challenges (new and diverse competition in New England and in theAlbany, NY market) that confront its long-time successful Hannaford unit, Smith faces one of the toughest turnaround tasks in the industry.
‘Round The Trade
Supervalu might not be able to sell a lot of groceries, but it appears its legal department is still percolating. The big retailer/wholesaler has sued (in Minnesota) Leon Bergmann, the former president of its independent wholesale division, claiming Bergmann (ex-C&S) violated his non-compete agreement when he recently joined Unified Grocers as senior VP-sales, SVU’s largest wholesale competitor on the West Coast. Unified has also sued in a California court seeking to invalidate the non-compete agreement. Strangely, another former Supervalu senior executive, Sue Klug, former president of SVU’s Albertsons division in SoCal, has also joined Unified as chief marketing officer, but no legal action against her is pending. One last Supervalu note: the company managed to secure the last shipment of Twinkies (20,000 boxes) from Hostess Brands and plans to sell them at its struggling Jewel/Osco stores in the Chicago area. A perfect example of misery loving company…staying out West, now that Tesco has announced it will pull the plug on its failed Fresh & Easy experiment, it should be interesting to see who picks up the pieces. The Fresh & Easy story is really a simple one to recap: haughty, arrogant British retailer thinks it can build a better mousetrap (based on its overall corporate success in the U.K.) only to find that its flawed research led to an instant disconnect with U.S. consumers in California, Arizona and Nevada. Between Marks & Spencer, Sainsbury and now Tesco, perhaps the Brits would be better served choosing another country for expansion. As for those “pieces” (stores), if Wal-Mart is ever going to do more than “talk the talk” about expanding its small format operation, the opportunity to acquire the entire 200 store Fresh & Easy operation is staring them squarely in the eye…back to Minnesota: I was surprised to hear of the departure of Christoper Brown as president and chief operating officer of Minneapolis based wholesale Nash Finch. Brown, 52, was replaced by Kevin Elliott, who most recently was senior VP-merchandising, logistics and marketing at Dallas based 7-Eleven. Brown, who began his working relationship with Alec Covington, Nash Finch’s CEO, nearly 25 years ago, will certainly find new opportunities to choose from given his intelligence, tireless work and industry track record. But sometimes long-term successful relationships run their course, necessitating change (ask Andy Reid about that in another month or so)…on the manufacturing front, ConAgra has agreed to acquire Ralcorp, giving the Omaha based packer one of the best-balanced portfolios of branded and private label products of any food manufacturer. The transaction is valued at approximately $6.8 billion, including the assumption of debt. The acquisition will create one of the largest packaged food companies inNorth America, with sales of approximately $18 billion annually. It will also position ConAgra Foods as the largest private label packaged food business in theU.S., with combined private label sales of approximately $4.5 billion. “The acquisition of Ralcorp is a logical and exciting step for ConAgra Foods. Adding Ralcorp provides us with a much larger presence in the attractive and growing private label segment and accelerates our ‘Recipe for Growth’ strategy,” Gary Rodkin, chief executive officer of ConAgra stated…in news from the Southern tip of the Mid-Atlantic region, I had a chance to visit Kroger’s new Marketplace store in Richmond earlier this month. Wow! What a store. The new 123,600 square foot unit offers more than 300,000 items including furniture, jewelry and home fashion and décor. The food presentation, particularly its fresh departments, was magnificent. Kroger, which recently highlighted its aggressive expansion plans in the Tidewater market, will open a 124,000 square foot Marketplace at an old SuperK location in Virginia Beach next year and will cut the ribbon on its second Richmond area (Staple Mills & Hungary Road) Marketplace in 2014 and according to company officials will have a minimum of 10 Marketplaces by 2017…in union news of note, there’s been a big restructuring at Landover, MD-based UFCW Local 400, the largest local labor union in the country for clerks and meatcutters. Tom P. McNutt, who has served as president of Local 400 since May 2010 (following the retirement of Jim Lowthers), has resigned to accept a position with the UFCW International in Washington. Former secretary-treasurer of Local 400, Mark Federici, assumes the top post at Local 400. Federici issued the following statement: “I look forward to building on the strong foundation President McNutt leaves behind. As the Local union’s leadership changes hands, the entire staff and I will continue to work towards our primary goal of ensuring that the good wages and benefits of our members are protected and that our members receive the same high quality representation that the Local union has always provided.” McNutt’s father, Thomas R. McNutt, an iconic figure in the labor movement, served as president of Local 400 from 1976-1997.
Local Notes
On December 9, Weis opened its new 65,800 square foot replacement unit in Fogelsville, PA(Lehigh County), the first LEED (Leadership in Energy and Environmental Design) unit in its 162 supermarket fleet. It’s a great looking store (I really like Weis’ new prototype) that’s priced right and merchandised beautifully…Giant Eagle has acquired two formerly franchised stores in the Johnstown, PA market. The Pittsburgh based retailer will acquire units from owners Basil, Edward and Carmen Trovato, whose relationship with Giant Eagle dates back to 1986. Of Giant Eagle’s 230 supermarkets, about 55 stores are franchised…Village Super Markets saw its first quarter earnings dip 13 percent to $5.9 million in the period ended October 27. Overall sales increased 4.5 percent to $358.2 million. Same stores sales also rose 2.8 percent. The Springfield, NJ ShopRite operator attributed the decreased earnings to higher expenses and lower gross margins, even with a boost in revenue from Superstorm Sandy. Village currently operates 29 stores in New Jersey, Pennsylvania and Maryland and is the second largest member of Wakefern and its only publicly-traded retailer…UNFI, the largest natural and organics wholesaler in the country, and a distributor who has also seen its specialty foods division grow exponentially in recent years, posted a 42 percent earnings jump in its first quarter which ended on October 27. The Providence based firm earned $21.5 million on sales of $1.41 billion (a 16 percent gain). While expressing satisfaction with the solid results, UNFI CEO Steve Spinner had some concerns, too: “Despite moderated inflation and higher than anticipated product shortages, strong consumer demand continued to drive steady growth for our products and services during the quarter.We anticipate growth for the holiday season should remain strong as consumers continue to move towards a healthier lifestyle.” ….in the obit column, I’m very sad to report the death of one of the most influential jazz pianists of the past 50 years, Dave Brubeck. Brubeck, who died one day before his 92nd birthday earlier this month, recorded one of best selling jazz albums of all time “Time Out” (1959) which produced the crossover hit “Take Five.” However, the album’s first track “Blue Rondo a La Turk” is, in my opinion, the best song on the record – a tune that blends folk, jazz and a touch of Mozart. Also passing on was Ravi Shankar, a man who did as much for his instument (sitar) as Brubeck did for the piano.The Indian born virtuoso passed away last month in San Diego at the age of 92. Shankar influenced dozens of famous musicians including George Harrision (who nicknamed him “The Godfather of World Music”), David Crosby and even John Coltrane. Shankar was also the father of American pop singer Norah Jones…from the food industry, Berthold Aldi has died. Along with Theo Jr., the brothers presided over an international empire of grocery stores (Aldi, Trader Joe’s) that made them among the richest men in the world (the brothers’ fortune has been estimated by Forbes at $17.8 billion). Berthold Aldi, who only 58 years old, earned his money the hard way – he inherited it from his late father, Theo Sr. and uncle Karl, 92 (who is reported to be the richest man in Germany with an estimated net worth of $25.4 billion). The elder Aldis founded the company in Essen, Germany shortly after World War II ended…also leaving us was Mark Hollis, 78, former president of Publix. According to Publix CEO Ed Crenshaw, Hollis made “significant contributions to the growth and success” of Publix, adding that Holllis was “a Publix icon.” Hollis began his career at Publix in 1946 as a potato bagger. He worked in a variety of roles, including company president from 1984 to 1996. He was elected to the Publix board of directors in 1974 and served there until 2005, when he was honored as director emeritus…Howard Stoeckel, chief executive of Wawa, will retire at the end of the year and before I close this month’s entry, I’d be remiss if I didn’t salute Howard’s contributions that helped make Wawa the finest convenience store retailer in the industry. His steely passion for the business, his tremendous leadership and people skills, his unflinching work ethic, overall intelligence and integrity has not only made Howard one of the best CEOs in the food industry, but one of the top chief executives in the country. His successor, Chris Gheysens, will have big shoes to fill.