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Royal Ahold announced this morning a 15 percent decrease in third quarter net profit, and said that earnings per share for the fiscal year will likely be down between six and eight percent, as opposed to a previous projection that per share earnings would be up by eight percent.

Third-quarter 2002 net earnings were the equivalent of $260.7 million (US), down from $307.9 million (US) during the same period a year ago. Sales actually were up almost six percent, to the equivalent of $16.6 billion.

The company blamed problems in South America and the US for its poor quarterly performance; Ahold does two-third of its revenue in the US with chains like Stop & Shop, Giant of Landover, and Bi-Lo.

CEO Cees van der Hoeven announced that he has agreed to remain in his position for another five-to-seven years, stifling speculation that he might resign.

It was just yesterday that Ahold announced that it would announce its third quarter numbers a week early, fueling rumors that van der Hoeven was on his way out. These rumors started at the end of the second quarter, when Ahold announced its first net loss is almost three decades.

Ahold also announced that it will sell underperforming and “non-core” businesses to help limit the impact on its stock price.
KC's View:
It would have been a shame if van der Hoeven had been forced out after a couple of bad quarters that take place in the context of a terrible economic downturn. He always has seemed to us to be a tough, pragmatic businessman, and we can’t imagine who else might have been better for Ahold’s future.

Now, that’s not to say that some of Ahold’s businesses won’t see their individual leaderships change. One can imagine that some of the CEOs of its various chains might be vulnerable…after all, van der Hoeven also doesn’t strike us as someone who would keep people on for sentimental reasons.