Ahold Delhaize Strategy Day

[jamcool]

A "Strategy Day" type open house is not going to announce anything of substance from a transaction perspective, or even anything from a financial or restructuring perspective.

These types of calls happen all the time at retailers, they're usually called "investor day" and they accompany the rollouts of new product lines, new logos, new ad campaigns, new marketing strategies, and generally are accompanying a new prototype store from some hotshot design firm that looks really cool and innovative but typically is too expensive to roll out anywhere.

Anything that would be of real importance, such as expanding to a new market via merger or acquisition would have been prefaced by a statement months ago that the company is "seeking strategic alternatives" which requires thousands of pages of filings with the SEC and such. I am sure if said actions had occurred we would have a thousand posts already.

Anything involving the Kroger Albertsons merger would not be discussed in any form as that transaction at this current time is not apparently open for discussion. If a change was made involving Ahold Delhaize maybe replacing C&S you would be hearing from Kroger first.

So don't expect this to be anything meaningful. It will be a corporate cheerleading event with a bunch of cool PowerPoint slides and maybe a remodeled pretty store that will never be duplicated in it's current costly form. They do need a new logo for some brands as the fruit bowl looks stuck in the early 2000s so my bet is on that along with a marketing campaign, some "new lower prices" strategy etc. If you're expecting anything major then take this as your warning to prepare for disappointment.

I'm inclined to agree. Still, I'm interested in hearing Ahold Delhaize articulate their US strategy, particularly with Stop & Shop where from the outside it truly seems like there is no strategy at all other than barely get by and close stores when their leases run out. I want to hear how they describe what they're doing and what they're hoping to do in the future.

They're probably going to show off a remodeled Stop and Shop somewhere with yet another new logo, a new tagline, a new private label maybe. Once again these are very high level type events that will not reveal any specific operating details. They are usually intended to "fake out" a few stores and try to convince investors that the company knows what it's doing because of the fact that the store looks really pretty for the meeting. They are not going to reveal anything past that. These are events run by the marketing department that allow them to show off like cheerleaders. The people running these events typically wouldn't even understand how to gather shopping carts in the parking lot and won't have any actionable information. Obviously investors are concerned about their operations so they are going to try to convince them to please go away and stop complaining.

Remember that again if they intend to actually do something productive that is of financial significance they would not report it at a meeting like this, there would be an SEC filing of upcoming meeting announcing an important transaction, etc. If anyone asks questions like why have so many Stop & Shop closed, are they profitable etc. they are going to be referred back to the next scheduled earnings call Q&A where their questions will be answered after appropriate legal warnings, lawyers present etc.

I worked for a company that held one of these meetings for investors. It was Circuit City. They announced that they were going to remodel the entire chain and rebrand to The City. They built a few prototype stores with a really cool layout with lots of circular fixtures that looked something like a futuristic version of the Apple store. The company was in bankruptcy less than two months later and the majority of the just opened new stores were the first wave of liquidation before the entire chain went under. One of the new The City stores had just held its grand opening a few days before being announced as closing. Someone in finance was unaware and sold the wrong store to the liquidator, they were supposed to sell the old crummy store in the same town.

That should tell you about how much these meetings are worth.

Rebranding to. “The City” sounds like that ill-fated attempt to rename Pizza Hut to just “The Hut”. Or the earlier attempt to rename Jack In The Box to “Monterey Jack’s”.

[pseudo3d]

A "Strategy Day" type open house is not going to announce anything of substance from a transaction perspective, or even anything from a financial or restructuring perspective.

These types of calls happen all the time at retailers, they're usually called "investor day" and they accompany the rollouts of new product lines, new logos, new ad campaigns, a fluffy new loyalty card program, new marketing strategies, new mission statement stuff. Generally meetings like this are accompanied by a new prototype store from some hotshot design firm that looks really cool and innovative but typically is too expensive to roll out anywhere.

Anything that would be of real importance, such as expanding to a new market via merger or acquisition would have been prefaced by a statement months ago that the company is "seeking strategic alternatives" which requires thousands of pages of filings with the SEC and such. I am sure if said actions had occurred we would have a thousand posts already.

Anything involving the Kroger Albertsons merger would not be discussed in any form as that transaction at this current time is not apparently open for discussion. If a change was made involving Ahold Delhaize maybe replacing C&S you would be hearing from Kroger first.

So don't expect this to be anything meaningful. It will be a corporate cheerleading event with a bunch of cool PowerPoint slides and maybe a remodeled pretty store that will never be duplicated in it's current costly form. They do need a new logo for some brands as the fruit bowl looks stuck in the early 2000s so my bet is on that along with a marketing campaign, some "new lower prices" strategy etc. If you're expecting anything major then take this as your warning to prepare for disappointment.

I'm betting the fruit bowl is replaced by a Lion head and green lettering to match their recent corporate rebrand.

The problem is that unless something has been kept under wraps, there's not really a "flagship" to unveil. Most retailers will often do at least one time in their careers a prototype store that looks spectacular and use it as a "model" for future stores. Winn-Dixie's "Down-Down" Decor started as something upscale and dramatic. Market 32 started as Market Bistro. The original Mervyn's California concept included day care centers and an in-store restaurant. JCPenney had the "Penney's" concept in Texas.

[ClownLoach]

A "Strategy Day" type open house is not going to announce anything of substance from a transaction perspective, or even anything from a financial or restructuring perspective.

These types of calls happen all the time at retailers, they're usually called "investor day" and they accompany the rollouts of new product lines, new logos, new ad campaigns, a fluffy new loyalty card program, new marketing strategies, new mission statement stuff. Generally meetings like this are accompanied by a new prototype store from some hotshot design firm that looks really cool and innovative but typically is too expensive to roll out anywhere.

Anything that would be of real importance, such as expanding to a new market via merger or acquisition would have been prefaced by a statement months ago that the company is "seeking strategic alternatives" which requires thousands of pages of filings with the SEC and such. I am sure if said actions had occurred we would have a thousand posts already.

Anything involving the Kroger Albertsons merger would not be discussed in any form as that transaction at this current time is not apparently open for discussion. If a change was made involving Ahold Delhaize maybe replacing C&S you would be hearing from Kroger first.

So don't expect this to be anything meaningful. It will be a corporate cheerleading event with a bunch of cool PowerPoint slides and maybe a remodeled pretty store that will never be duplicated in it's current costly form. They do need a new logo for some brands as the fruit bowl looks stuck in the early 2000s so my bet is on that along with a marketing campaign, some "new lower prices" strategy etc. If you're expecting anything major then take this as your warning to prepare for disappointment.

I'm betting the fruit bowl is replaced by a Lion head and green lettering to match their recent corporate rebrand.

The problem is that unless something has been kept under wraps, there's not really a "flagship" to unveil. Most retailers will often do at least one time in their careers a prototype store that looks spectacular and use it as a "model" for future stores. Winn-Dixie's "Down-Down" Decor started as something upscale and dramatic. Market 32 started as Market Bistro. The original Mervyn's California concept included day care centers and an in-store restaurant. JCPenney had the "Penney's" concept in Texas.

I've had to be involved in investor days and it is never something where they are the first to get their eyes on it... And usually when it is, it turns into a train wreck. The most recent "investor day" type presentation talked about all over this board was Rite Aid Store of the Future, and we know how badly that turned out. The smart companies know that investors aren't necessarily going to get in a plane and fly around to check out new stores. They put something together and then they make sure it's getting a good public reaction, then they show it off. By that time of the "unveiling" tens of thousands have already been through it, tweaks have been made and problems fixed. Just because things look good on blueprints doesn't mean they work in real life. Even the best intentions wind up having to be adjusted.

[ClownLoach]

I'm inclined to agree. Still, I'm interested in hearing Ahold Delhaize articulate their US strategy, particularly with Stop & Shop where from the outside it truly seems like there is no strategy at all other than barely get by and close stores when their leases run out. I want to hear how they describe what they're doing and what they're hoping to do in the future.

They're probably going to show off a remodeled Stop and Shop somewhere with yet another new logo, a new tagline, a new private label maybe. Once again these are very high level type events that will not reveal any specific operating details. They are usually intended to "fake out" a few stores and try to convince investors that the company knows what it's doing because of the fact that the store looks really pretty for the meeting. They are not going to reveal anything past that. These are events run by the marketing department that allow them to show off like cheerleaders. The people running these events typically wouldn't even understand how to gather shopping carts in the parking lot and won't have any actionable information. Obviously investors are concerned about their operations so they are going to try to convince them to please go away and stop complaining.

Remember that again if they intend to actually do something productive that is of financial significance they would not report it at a meeting like this, there would be an SEC filing of upcoming meeting announcing an important transaction, etc. If anyone asks questions like why have so many Stop & Shop closed, are they profitable etc. they are going to be referred back to the next scheduled earnings call Q&A where their questions will be answered after appropriate legal warnings, lawyers present etc.

I worked for a company that held one of these meetings for investors. It was Circuit City. They announced that they were going to remodel the entire chain and rebrand to The City. They built a few prototype stores with a really cool layout with lots of circular fixtures that looked something like a futuristic version of the Apple store. The company was in bankruptcy less than two months later and the majority of the just opened new stores were the first wave of liquidation before the entire chain went under. One of the new The City stores had just held its grand opening a few days before being announced as closing. Someone in finance was unaware and sold the wrong store to the liquidator, they were supposed to sell the old crummy store in the same town.

That should tell you about how much these meetings are worth.

Rebranding to. “The City” sounds like that ill-fated attempt to rename Pizza Hut to just “The Hut”. Or the earlier attempt to rename Jack In The Box to “Monterey Jack’s”.

If they had listened to their employees, it would have probably kept the Circuit somehow and dropped the City. Even if it was just called "Circuit." That was what most employees referred to it as, never "The City". The new name was only to go on new stores with the completely new format which was like a super sized Apple store but more sleek, interactive and comfortable. They realized that if they could get people through the doors they loved the new stores, but until they tried a different name people thought it was the same old Circuit City that they had stopped shopping at years ago. They had proven inept at marketing to drive traffic into stores, and the stores were too different from one another. The newer store designs were quickly copied by Best Buy who lowered their fixtures and sight lines, cut down all the forklift pallet racking on the floor, etc. But too many old ones remained with limited selections, dim lighting and such. They were one of the best examples of a chain that would see sales at their best increase 300% when a store was completely remodeled, expanded, or relocated because customers did not associate the older stores with the latest technology. Despite the obvious return on investment from remodels and relocations they overspent on the fat cat executives at the office instead.

[buckguy]

I'm with you on all this. There's a relatively new Stop & Shop in Waterbury, where they moved across the street into a closed ShopRite. It honestly looks really good and would be perfect for exactly what you describe (although it doesn't get particularly good reviews online, with complaints ranging from out-of-stocks to prices to racism so... I have no idea how well the store is actually being run). They deflected specifics on store performance from the Q1 results call to this strategy call, but still, as you said it wouldn't surprise me if they deflect again to the next earnings call.

That's a great looking store and I love that black ceiling!

Black ceilings come out badly about 90% of the time. The surrounding design and lighting must be perfect for them to work. They pulled it off here beautifully, I agree. And I think the black works with the branding here. Most of the other pictures of Stop & Shop stores I've seen posted looked dated and cheaply designed. This probably wasn't too expensive to produce but looks really good. And the deli case looks great with the large assortment of Boars Head. That's a store I would want to go see. So if they're going to discuss improvements like that it would be worthy of a meeting like that.

It looks better than their last round of remodels which truly have a cheap appearance. My guess is that you'd really need to know the chain and its operations in depth to get much from this kind of call. Absent a knowledge of "inside baseball", it's likely to be a PR exercise.

[marketreportblog]

I'm on the Strategy Day call now. There's currently a discussion of the European brands, which I am not paying close attention to. However, JJ Fleeman, the CEO of the US division, spoke giving a high-level overview of the strategy for the US stores. Nothing too surprising for most of it:

• 85% of Ahold Delhaize USA is self-distributed now. Previously, they were majority supplied by C&S.

• In the next four years, they anticipate 1000 new stores and remodels.

• They intend to invest $1 billion in pricing. Beyond talking about general operational efficiencies, he was not specific on what that would entail.

• For Giant-PA, he mentioned "new stores and formats," which might mean they want to expand the Heirloom Market concept or want to create other formats.

• For Hannaford, he mentioned adding new stores at the outer reaches of their footprint -- which might mean more in MA, upstate NY, or rural parts of ME where they're not currently. He said something similar about Food Lion, which he called a "powerhouse brand".

Of course I am most interested in Stop & Shop, and although no specifics were discussed (yet?), there were nevertheless some striking quotes. Fleeman rather openly admitted Stop & Shop is not succeeding, but didn't explicitly say whether the chain as a whole is profitable:

"It's not enough, not where we want to be or need to be...the value proposition and pricing at Stop & Shop are not strong enough."

By reading between the lines, I suspect Stop & Shop is preparing for a market exit (and as I've said before, I suspect that is some or all of New Jersey and maybe some or all of New York City). He prefaced the Stop & Shop overview by saying:

"Stop & Shop has done a thorough evaluation, and is focused on ensuring a stable and thriving future... [we are]optimizing the portfolio to focus on core markets where [Stop & Shop] can win."

"Stop & Shop will focus on the markets that are most important...Stop & Shop has already evaluated its overall portfolio and will make difficult decisions to close underperforming stores to create a healthy store base for the long term."

Emphasis, of course, is mine. But it wasn't all bad news from Stop & Shop: he said it is the #1 supermarket in several of the seven metropolitan areas where it operates (he did not specify which or how many). He said sales have improved at remodeled stores following the remodels, and that since 2018, approximately 190 stores have been remodeled. He briefly touched on some other areas of improvement, which included efficiencies in corporate management (boring, but probably necessary) and -- most interesting to me -- "well-stocked shelves." So even they are aware that the shelves are understocked.

I'm going to stay on the call and will summarize any other particularly interesting news from the second half. The call is currently on a brief break roughly halfway through.

[veteran+]

I'm on the Strategy Day call now. There's currently a discussion of the European brands, which I am not paying close attention to. However, JJ Fleeman, the CEO of the US division, spoke giving a high-level overview of the strategy for the US stores. Nothing too surprising for most of it:

• 85% of Ahold Delhaize USA is self-distributed now. Previously, they were majority supplied by C&S.

• In the next four years, they anticipate 1000 new stores and remodels.

• They intend to invest $1 billion in pricing. Beyond talking about general operational efficiencies, he was not specific on what that would entail.

• For Giant-PA, he mentioned "new stores and formats," which might mean they want to expand the Heirloom Market concept or want to create other formats.

• For Hannaford, he mentioned adding new stores at the outer reaches of their footprint -- which might mean more in MA, upstate NY, or rural parts of ME where they're not currently. He said something similar about Food Lion, which he called a "powerhouse brand".

Of course I am most interested in Stop & Shop, and although no specifics were discussed (yet?), there were nevertheless some striking quotes. Fleeman rather openly admitted Stop & Shop is not succeeding, but didn't explicitly say whether the chain as a whole is profitable:

"It's not enough, not where we want to be or need to be...the value proposition and pricing at Stop & Shop are not strong enough."

By reading between the lines, I suspect Stop & Shop is preparing for a market exit (and as I've said before, I suspect that is some or all of New Jersey and maybe some or all of New York City). He prefaced the Stop & Shop overview by saying:

"Stop & Shop has done a thorough evaluation, and is focused on ensuring a stable and thriving future... [we are]optimizing the portfolio to focus on core markets where [Stop & Shop] can win."

"Stop & Shop will focus on the markets that are most important...Stop & Shop has already evaluated its overall portfolio and will make difficult decisions to close underperforming stores to create a healthy store base for the long term."

Emphasis, of course, is mine. But it wasn't all bad news from Stop & Shop: he said it is the #1 supermarket in several of the seven metropolitan areas where it operates (he did not specify which or how many). He said sales have improved at remodeled stores following the remodels, and that since 2018, approximately 190 stores have been remodeled. He briefly touched on some other areas of improvement, which included efficiencies in corporate management (boring, but probably necessary) and -- most interesting to me -- "well-stocked shelves." So even they are aware that the shelves are understocked.

I'm going to stay on the call and will summarize any other particularly interesting news from the second half. The call is currently on a brief break roughly halfway through.

Delicious "fly on the wall" stuff!

Thank you!

[ClownLoach]

I'm on the Strategy Day call now. There's currently a discussion of the European brands, which I am not paying close attention to. However, JJ Fleeman, the CEO of the US division, spoke giving a high-level overview of the strategy for the US stores. Nothing too surprising for most of it:

• 85% of Ahold Delhaize USA is self-distributed now. Previously, they were majority supplied by C&S.

• In the next four years, they anticipate 1000 new stores and remodels.

• They intend to invest $1 billion in pricing. Beyond talking about general operational efficiencies, he was not specific on what that would entail.

• For Giant-PA, he mentioned "new stores and formats," which might mean they want to expand the Heirloom Market concept or want to create other formats.

• For Hannaford, he mentioned adding new stores at the outer reaches of their footprint -- which might mean more in MA, upstate NY, or rural parts of ME where they're not currently. He said something similar about Food Lion, which he called a "powerhouse brand".

Of course I am most interested in Stop & Shop, and although no specifics were discussed (yet?), there were nevertheless some striking quotes. Fleeman rather openly admitted Stop & Shop is not succeeding, but didn't explicitly say whether the chain as a whole is profitable:

"It's not enough, not where we want to be or need to be...the value proposition and pricing at Stop & Shop are not strong enough."

By reading between the lines, I suspect Stop & Shop is preparing for a market exit (and as I've said before, I suspect that is some or all of New Jersey and maybe some or all of New York City). He prefaced the Stop & Shop overview by saying:

"Stop & Shop has done a thorough evaluation, and is focused on ensuring a stable and thriving future... [we are]optimizing the portfolio to focus on core markets where [Stop & Shop] can win."

"Stop & Shop will focus on the markets that are most important...Stop & Shop has already evaluated its overall portfolio and will make difficult decisions to close underperforming stores to create a healthy store base for the long term."

Emphasis, of course, is mine. But it wasn't all bad news from Stop & Shop: he said it is the #1 supermarket in several of the seven metropolitan areas where it operates (he did not specify which or how many). He said sales have improved at remodeled stores following the remodels, and that since 2018, approximately 190 stores have been remodeled. He briefly touched on some other areas of improvement, which included efficiencies in corporate management (boring, but probably necessary) and -- most interesting to me -- "well-stocked shelves." So even they are aware that the shelves are understocked.

I'm going to stay on the call and will summarize any other particularly interesting news from the second half. The call is currently on a brief break roughly halfway through.

Delicious "fly on the wall" stuff!

Thank you!

Basically it's fluffy things. Anything actually strategic like a specific outcome for Stop & Shop would not be discussed in such a venue. It's nice to know info for investors, but these types of calls will never get into explicit financial performance. If I was an investor and I had to hear acknowledgement of failure of the absolute basics like full shelves I would be furious. Connect the dots. He says they switched to self distribution, and the shelves aren't staying full. So basically not only do they not know how to operate stores properly, they don't know how to distribute either and should not have fired C&S. I guess C&S is more competent? And that means they don't know how to manage inventory, forecast, analyze data, etc. Lots of bad there that even relatively small and local chains can figure out but this multinational conglomerate can't?

[marketreportblog]

Most of the afternoon was not particularly substantive. I gather, though, that they are preparing for more Stop & Shop closures, potentially a large number:

"We've completed the overall portfolio assessment [of Stop & Shop]. We won't share the exact number of impacts on those stores today, but we will come back later in the year to talk about that." - JJ Fleeman, CEO of ADUSA

CFO Jolanda Poots-Bijl mentioned closures explicitly, saying that closing certain Stop & Shop stores -- which it sounds like will be done by the end of 2025 at the latest -- is already factored into their financial guidance for the coming years. When an audience member pushed back and asked for more specifics on Stop & Shop, here was CEO Frans Muller's rather vague response:

"You will see this in the course of this year, that position. And for this we need proper decision making, that's also an impactful decision to make. All the prework has been done by JJ and the team, so we know exactly where we intend to go. But we would like to make sure we do this all also in a proper way from a planning perspective, and also in a proper way in a social perspective, too. So you'll have to be a little bit patient but the year is not that long anymore, and then we'll get a little bit more there."

To cut through the fluff, my best guess is that they're looking to close a significant number of stores -- they wouldn't make such a big deal of it if it were just a handful -- but also that they want to be careful about how that would change perception of the brand, and that customers and employees would likely resent large numbers of store closures ("a proper way from a social perspective"). But it does sound like a specific announcement will be coming, and that there is in fact something going on at Stop & Shop.

[ClownLoach]

Most of the afternoon was not particularly substantive. I gather, though, that they are preparing for more Stop & Shop closures, potentially a large number:

"We've completed the overall portfolio assessment [of Stop & Shop]. We won't share the exact number of impacts on those stores today, but we will come back later in the year to talk about that." - JJ Fleeman, CEO of ADUSA

CFO Jolanda Poots-Bijl mentioned closures explicitly, saying that closing certain Stop & Shop stores -- which it sounds like will be done by the end of 2025 at the latest -- is already factored into their financial guidance for the coming years. When an audience member pushed back and asked for more specifics on Stop & Shop, here was CEO Frans Muller's rather vague response:

"You will see this in the course of this year, that position. And for this we need proper decision making, that's also an impactful decision to make. All the prework has been done by JJ and the team, so we know exactly where we intend to go. But we would like to make sure we do this all also in a proper way from a planning perspective, and also in a proper way in a social perspective, too. So you'll have to be a little bit patient but the year is not that long anymore, and then we'll get a little bit more there."

To cut through the fluff, my best guess is that they're looking to close a significant number of stores -- they wouldn't make such a big deal of it if it were just a handful -- but also that they want to be careful about how that would change perception of the brand, and that customers and employees would likely resent large numbers of store closures ("a proper way from a social perspective"). But it does sound like a specific announcement will be coming, and that there is in fact something going on at Stop & Shop.

Basically a Stop & Shop mass closure is on the way, and they want to reiterate to investors that they have more growth plans than closure plans. I would still have concerns about the execution ability which is far below industry standard.