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Comments about Ahold and the financial issues that have helped contribute to its current problems…

One MNB user wrote:

“We have done a lot of work with the Ahold companies here in the US, and our experience has never been anything but exceptional. The people working the front lines at Ahold USA, Stop & Shop, Giant of Maryland and Giant Carlisle are some of the brightest in the business, and they conduct themselves as well or better than anyone we deal with in the US.

“It's painful to read what these people are going through. Bad things do tend to run down hill, and these folks are going to have it all over them. On the bright side, many of the assets held by Ahold in the US are outstanding, and since they have always run autonomously they will survive nicely.”

Another MNB user had a somewhat different experience:

“About one year ago, we had an issue with Stop and Shop ( a larger Ahold banner ) that was so out of control that we finally had to have the attorneys work it out. They were debiting for damaged goods that were in excess of the amount they had purchased ! You would think that they couldn't possibly do something "that blatant", but they did..

“They immediately offered a settlement because Massachusetts has a treble damages law and we had them cold. As I always say, we cannot be the only one they tried this with. Behavior like this comes from the top and it infiltrates the entire organization. You have to know there are many more stories to come.”

MNB user Westall Parr offered a cautionary note:

“This sounds like a horse that has been frightened and is running hell bent for leather -totally out of control.

“And that is what is happening to Ahold.

“There is a problem - that's quite certain and all the right steps are being taken.

“The two top honchos fell on their swords. Note that the two that left at US Foodservice were at the level where the action appears to have taken place.

“There is a feeding frenzy going on and the "media" of which you are one isn't helping.

“The firm has been around for a long long time and I don't get the sense that these guys are a bunch of (dirt) bags.

“Could we not let the process take place?

“If I were in the market today I would buy. Great company - they know their business and they will recover.

“Let us not get too carried away with this.

And, Content Guy, use this as an opportunity to start a discussion on
those promotional allowances and the other methods that are used to sell product. Those have a very fishy odor to them.”

We agree. Let the discussion begin.,

On the subject of promotional payments in general, one MNB user wrote:

“If you were to ask any manufacturer, they would gladly give up promotional payments of all kinds if they could. But, the grocery trade is addicted to extracting these payments from vendors and has an established infrastructure that supports it. It is the way they account for these monies that results in them being unable to price compete with Wal-Mart because Wal-Mart gets invoiced dead net while the grocers prefer to see promotional monies in lump sum checks! Thus, when they price, they start with a cost basis that is higher than it would be if they deducted the promotional monies from the cost. Then they complain they can’t compete with Wal-Mart on price. Hooey!!

“The industry would be far better off if these payments and inducements were somehow declared illegal. Several years ago, the FTC had a chance to do this. Instead, they studied the issues and decided to take no action. Now, the courts, through shareholder suits, will make it extremely uncomfortable for a company to account for these payments.

“As a director of a grocery company, I would demand that the company take the most conservative route: Get all monies off invoices as goods are received. That way, I would not have to worry about whether an executive is manipulating income by managing the way they recognize these revenues. And, I’d be making my company more competitive with Wal-Mart. Both, good thing.”

MNB user Bill Blakley wrote:

“You’re right on to focus on how thousands of Ahold people are affected by the greediness of a few top management decision makers. Hopefully they are prosecuted for criminal charges – however, your note seems to infer that the Dutch are taking this a seriously as we are in US? What do you think?”

We think that in many ways, it appears that the Dutch public opinion seems to be more outraged than it is here in the US; Ahold has a much higher profile there than here. (Think if Wal-Mart had these problems in the US and the kind of reaction it would create.) It is hard for us to figure out if Ahold’s legal problems in the Netherlands will be as great as they are here. We suspect that US laws are tougher, but we’re neither lawyer nor accountant…just a simple country writer.

We wrote yesterday that we needed to catch our breath after reporting a veritable litany of stories about Ahold. One MNB user responded:

“You are correct about needing to catch your breath. A part of my job is to locate, ingest and regurgitate news from the industry and I feel once again like Templeton the rat, sick from the garbage.

“You did a masterful job in summarizing the schmuck from the Netherlands.

“What were these people thinking? From my perspective they were driven by two things: greed and ego. They wanted it all and had an inflated image of themselves that made them think they were smarter than the people who watchdog these things. It worked for a while, which means it didn't work.

“Your comments on the people who will be hurt by all this were right on target. The innocent little guy pays the ultimate price, whether an employee and/or an investor. It all tastes like ashes to him in the end because as you say, it really is all about money and only money.”

And thanks to the MNB user who sent us the following evaluation of our efforts to put the Ahold situation in context:

“It couldn't have been said any better. Very insightful, very compassionate and very relevant.”

We’re blushing…
KC's View: