BRUSSELS — Disappointed at being passed over for promotion to chief executive officer of Delhaize Group, Roland Smith abruptly resigned as the retailer’s U.S. CEO last week while observers looked to see who might follow him out the door.
Delhaize last week surprised many industry observers when it named former Metro AG executive Frans Muller as its new CEO. While company officials confirmed that Smith was “naturally disappointed” at having not been selected to take over Delhaize there was speculation last week that Muller’s appointment might also lead to the departure of Pierre Borchut, Delhaize’s chief financial officer. Company officials last week, however, said they were not aware of other executives departing the company.
Delhaize said it would consolidate the roles of Delhaize’s U.S. and European CEOs under Muller in Brussels. Muller will succeed Pierre-Olivier Beckers, who announced plans to retire earlier this year. His appointment is effective Oct. 14.
Smith was appointed a little more than a year ago to head Delhaize’s U.S. operations in Salisbury, N.C., and is credited for accelerating a turnaround plan involving the closure of unprofitable stores, aggressive restructuring of corporate and field staffs and the decision earlier this year to sell the Sweetbay, Harveys and Reid’s chains. “He built quite a good track record in a short period of time,” one analyst, Patrick Roquas of Rabobank, told SN.
Smith, who is departing “on good terms” with Delhaize Group, officials said, will continue to serve in an advisory role until the end of the year.
Roquas called the appointment of Muller “peculiar for a number of reasons” including Muller’s lack of experience in the U.S., where its Food Lion and Hannaford brands generated more than 64% of its nearly $30 billion in worldwide revenues last year.
“In all, we fear that the pace of recovery in the U.S. might be delayed somewhat,” Roquas said.
Muller’s performance at Metro was also a cause for some investor concern, sources said. One analyst, who asked not to be identified, noted that Metro Cash & Carry declined under Muller’s watch, leading to a demotion in 2009. And though Muller was subsequently reinstated, he was let go by Metro earlier this year.
“The good things about him are, he has a lot of experience including managing a large company. Metro Cash & Carry is a lot larger than Delhaize and operates in 30 countries,” the source said. “The problem is, his record at Metro hasn’t been so great. … Investors don’t seem to like him and they see him as a bit of a lightweight, and think maybe an internal candidate would have been better. I also think there are fears that the CFO of Delhaize will leave as well.”
According to Roquas, the appointment of Muller may also be a signal from Delhaize’s board that it prefers to keep the company’s various businesses together “whereas, [Borchut] seems more open to alternative scenarios.”
Delhaize officials cited Muller’s experience and global perspective as key reasons for the hire.
“Frans has the right mix of experience and skills to lead our company into the future and we are pleased to welcome him to Delhaize Group,” Mats Jansson, Delhaize’s chairman, said. “He brings a deep understanding of global food retailing and we are impressed by his international perspective, operational expertise, and proven ability to grow businesses.”
Although Muller will be based in Brussels, company officials said he would spend a “significant amount of time in the U.S.” Officials noted they were pleased with results in the U.S. where a multiyear rebranding strategy involving initiatives to lower everyday pricing and improve service at Food Lion have resulted in sales momentum. The company is also expanding its Bottom Dollar discount format and investing in price at Hannaford.
Read more: Delhaize America Still a Work in Progress
“We do not anticipate any changes to the U.S. at this time,” the company said in a statement. “Delhaize America has a solid management team who will continue to focus on critical priorities to support the company’s further progress in the U.S. From a Delhaize Group perspective, the company remains focused on its set priorities to strengthen its retail brands, execute targeted price investments and accelerate organic growth in selected markets. Our long-term strategy will build upon the foundation we have in place.
“With that said, it is important to note that it is common practice for a new CEO to take at least 100 days to get familiar with the business and develop his view in close cooperation with the board of directors.”
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