February 26, 2010

Hannaford parent to streamline operations

EDWARD D

— By . MURPHY

Staff Writer

Delhaize Group, the parent company of the Hannaford supermarket chain, is streamlining operations of its four subsidiaries, which will likely mean fewer jobs at Hannaford's headquarters in Scarborough.

The company said the restructuring focuses on support operations and is expected to be invisible to customers. No Hannaford stores will close because of the reorganization, the company said Thursday, although 16 stores in two other chains will be closed.

The restructuring will combine some back-office operations, such as human resources, finance and information technology, to save costs.

''It's a better operational platform for us,'' said Michael Norton, a spokesman for Hannaford. ''It is a significant and good change to create a stronger foundation.''

Norton said the reorganization will take a year to 18 months to complete, and until then Hannaford can't estimate how many of the approximately 750 jobs in Scarborough might be lost.

He said Scarborough will be given responsibility for Delhaize Group's human resources operation, which includes administering benefits and developing compensation strategies. Other functions, such as finance and accounting, will be shifted to Salisbury, N.C., where Delhaize Group has another significant management operation.

Ron Hodge, Hannaford's chief executive officer, is being elevated to CEO of Delhaize America Operations, with responsibility for the company's Food Lion, Bottom Dollar Food, Sweetbay and Hannaford divisions.

Beth Newlands Campbell, now in charge of Hannaford's retail operations and strategy, will become its president on Feb. 1.

Hodge will remain in the Scarborough office, Norton said, as will his two other chief subordinates: Greg Amoroso, who oversees strategy and research, and Mark Doiron, who is in charge of the supply chain.

Norton said that while management functions will be consolidated, store managers will retain significant autonomy over their retail operations.

The restructuring isn't surprising, given how hard the recession and competition have hit the grocery industry, said Andrew Wolf, a stock analyst with BB&T Capital Markets.

As the economy contracted and job losses mounted, consumers started buying lower-cost brands and less food overall, Wolf said. Many shifted to cheaper competitors, such as Walmart.

''The recession has been so severe that even the most successful companies have felt the pain, and I put Hannaford in that category,'' he said.

Wolf noted that two retailers that had never cut staffing, Whole Foods and Walgreens, recently had layoffs.

Cutting costs is a natural response, he said.

''Usually, you associate this (approach) with struggling businesses, but this recession has been so tough that even stronger companies have had to resort to this,'' he said.

Delhaize said it took a charge of $29 million in the final three months of 2009 for severance payments and asset write-offs related to the restructuring.

The effect of the recession was apparent in Delhaize Group's latest revenue report, released Thursday.

It said comparable U.S. store sales -- which excludes the impact of new stores -- fell 0.4 percent last year and 2.8 percent in the final three months of the year.

Part of that was due to food price deflation. In its revenue statement, Delhaize said retail prices dropped 2.1 percent in the final three months of 2009, compared with an increase of 6.5 percent in the same quarter of 2008.

Wolf said an economic recovery will be slow and weak, and supermarket chains will have to watch prices as they try to bring back shoppers who shifted to Walmart.

Staff Writer Edward D. Murphy can be contacted at 791-6465 or at:

emurphy@pressherald.com

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