Laurus N.V.

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Laurus N.V.

Parallelweg 64
's-Hertogenbosch 5201 AD
Netherlands
Telephone: +31 73 622 36 22
Fax: +31 73 622 36 36
Web site: http://www.laurus.nl

Public Company
Incorporated: 1998
Employees: 27,282
Sales: EUR 4.1 billion ($4.5 billion) (2003)
Stock Exchanges: Euronext Amsterdam
Ticker Symbol: LAU
NAIC: 445110 Supermarkets and Other Grocery (Except Convenience) Stores

Laurus N.V. is one of the Netherlands' top food retailing companies. The 's-Hertogenbosch-based company boasts nearly 750 supermarkets throughout the country, grouped under three primary formats: discount-oriented Edah; large-scale Konmar, and mid-sized Super De Boer. The latter format includes the largest number of company locations, at 369 stores, of which 214 are owned by affiliated independent retailers. Edah is the group's next largest format, with 269 stores, all but 58 of which are directly owned and operated by Laurus. The 125 Konmar stores—including nearly 50 Konmar Superstores—are also primarily controlled by Laurus itself, with just four franchised stores in the network. Since late 2003, the company has been testing a conversion of its smaller Konmar stores to its Edah and Super De Boer formats. Following on the success of the conversions, the company plans to convert all of the smaller Konmar stores by the middle of 2004. Formed in 1998 through the mergers of Unigro and De Boer Winkelbedrijven, followed closely by the merger of the newly formed De Boer Unigro with Vendex Food Group, Laurus stumbled into the 2000s and was forced into a restructuring that included the sell-off of most of its foreign holdings. As part of its restructuring, the company also received a capital injection from French retail giant Casino, which in 2002 became Laurus's largest shareholder at nearly 38 percent of its shares, with an option to raise its stake to 51 percent. By 2004, Laurus's restructuring, including its renewed focus on its three core formats, began to show signs of success. After losing nearly EUR 130 million in 2002, the company returned to profitability in 2003. Nonetheless, a brutal price war, led by Dutch market giant Albert Heijn, brought a drop in sales, to just EUR 4.1 billion ($4.5 billion) that year. Laurus is listed on the Euronext Paris stock exchange.

Dutch Grocers Group in the Early 20th Century

Laurus N.V. was formed through the mergers of three of the Netherlands' mid-sized supermarket groups in 1998. The merger of Unigro with De Boer Winkelbedrijven created Unigro De Boer. By the end of that year, the newly merged company had doubled in size, merging with the Vendex Food Group, the food retailing arm of Dutch department store heavyweight Vendex, to form Laurus. Yet the new company had roots in the early decades of the Dutch grocery retail industry and boasted such nationally recognized formats as Edah, Super De Boer, and Konmar.

Edah represented the oldest of the company's formats. The difficult economic climate in northern Friesland forced many in the region to move to the more industrialized south at the beginning of the 20th century. Among these were four Frisian grocers by the names of Ebben, Dames, Aukes, and Hettema who set up stores in the towns of Tilburg, Oss, Eindhoven, and Helmond. Much of the goods handled by these grocers came from the Dutch colonies, and by the end of the century's first decade, the four had banded together to increase their buying power. Taking the initials of their last names, they created a new cooperative, Edah. The cooperative's success soon led them to reincorporate as a public limited liability company, becoming NV Handel in Kolonie Waren Edah in 1917.

Edah began to expand following World War I as the Netherlands, which had remained neutral during the war, underwent an economic boom. The era saw the appearance of large numbers of new groceries—with little legislation codifying the establishment of grocery shops, the country saw the appearance of vast numbers of new, largely tiny grocers, reaching more than 70,000 by the end of the 1920s. At the same time, however, the first grocery chains, such as the Albert Heijn store chain, had already begun to form. These were joined by a growing number of cooperative grocery networks as well.

Edah itself grew strongly, in part through a series of acquisitions of other groceries and grocery chains in its Brabant region through the 1920s. The company's expansion also led it into the Limburg region as well, and by the beginning of the 1930s, there were already 100 stores within the Edah group. By the outbreak of World War II and the German occupation of the Netherlands, Edah had grown to nearly 130 stores. The war and the occupation severely restricted Edah's growth.

Following the war, however, Edah, like the rest of the Netherlands—and much of the world—became confronted with the grocery revolution pioneered by the United States earlier in the century. The appearance of the first self-service supermarket in the Netherlands in 1948 marked the beginning of a dramatic transformation of the Dutch grocery market. By the early 1950s, most of the country's grocery groups had already begun to experiment with their own supermarket formats. Edah itself joined this trend, opening its first supermarket in 1952 under the name Ziezo in the town of Heerlen. Edah also experimented with other formats, and especially became a pioneer in the discount segment in the early 1960s. By 1967, the company had begun to focus on the discount market, trimming back its network of stores to 87.

Forming the Vendex Food Group: 1970s

The 1970s marked a new period of growth for the company, which began a series of acquisitions, including the Brabant regio Andr van Hilst chain in 1972 and much of Coop Nederland in 1973. The latter acquisition in particular established Edah as one of the country's leading national supermarket groups. The company also expanded its range of formats, launching the Basismarkt and Torro chains, as well as the Dagmarkt and Autorama formats. In 1977, Edah itself was acquired, however, by department store group Vroom & Dreesmann (V&D). Edah then became that company's flagship supermarket brand.

At V&D, Edah was joined by another fast-rising supermarket format, Konmar. That company had been founded just a few years earlier by Henk van der Straaten and Jacques Koster, the former a market stall operator, the latter a grocer in the Hague. The two joined together in 1968 to launch their first deep discount store in Wateringen. That store's success led the partners to expand the format, and shortly after, the first Konmar (for KonsumentenMarkt) opened in the Hague. The large-scale, full-service format, which boasted among other features its own butcher, liquor store, drugstore, and baker, was an immediate success.

By 1970, Koster and van der Straaten had opened two more Konmars in the Hague, as well as a fourth property in Scheveingen. In the early 1970s, the company continued to improve and expand the Konmar format, becoming one of the first to deploy the superstore concept in the Netherlands. In 1977, Koster and van der Straaten sold the company to V&D, later Vendex International, with van der Straaten staying on to help guide Konmar's expansion into most of Holland's major urban markets.

By 1998, when Vendex spun off its grocery store operations into a new company, Vendex Food Group, there were nearly 100 Konmar stores in operation throughout the Netherlands. The new company, however, proved short-lived, however. By the end of 1998, Vendex Food Group had merged with another major supermarket force, De Boer Unigro, creating Laurus N.V.

Merging Unigro and De Boer in the 1990s

De Boer Unigro had been created just one year earlier through the fusion of southern Netherlands' Unigro and east Netherlands-based De Boer Winkelbedrijven. Both of these companies had their roots in the great Dutch grocery expansion years of the 1920s. Unigro's roots could be traced back to Theo Albada Jelgersma and son Ben Albada Jelgersma, who opened a wholesale grocery supplier in Breda in 1925. Their earliest products were such basics as coffee, tea, soap, and margarine. The Albada Jelgersmas' customer base grew strongly in its first decade—with more than 70,000 large and small grocers, many simply operating from their living rooms, in the country. New legislation in 1939 placed restrictions on grocery store ownership, and in the 1940s the number of grocers in the country dropped back to a still respectable 25,000.

The grocery market had also begun its first steps toward consolidation, in large part because of the appearance of a number of large-scale grocery chains, including Albert Heijn, Edah, and others. Grocers and wholesalers adopted the American innovation of forming independent affiliate groups, pooling their buying operations. The Albada Jelgersmas joined this trend, establishing their own buying partnership, called Verkoop Gemeenschap, or Végé. Other major buying groups included De Spar, formed in 1932; Centra, formed by the Schuitema family in 1934; and Vivo, formed in 1942. This last emerged as the country's strongest wholesalers association in the postwar period.

The rise of the self-service supermarket format, however, placed both wholesalers and their independent grocer customers under increasing pressure. During the 1950s and into the 1960s, the growing strength of the country's supermarket sector forced the wholesaler sector to consolidate. In 1966, a number of Vivo wholesalers decided to merge together to form a new, single operation, called Unigro, for Unie van Grossiers. Unigro grew strongly through the 1970s, in large part through the acquisition of more and more wholesalers and wholesaler associations.

Company Perspectives:

Mission: In its capacity as a leading Dutch supermarket corporation, Laurus is dedicated to maintaining a healthy and productive relationship with its customers, employees, affiliated independent retailers, shareholders and suppliers. As it is the customer on whom all other stakeholders are dependent, it is the customer who takes centre stage and who determines the day-to-day thinking and acting of all employees and affiliated independent retailers.

In Breda, meanwhile, Eric Albada Jelgersmas had led the family's Végé group through its own acquisition drive. Végé initially concentrated on the Brabants and Limburg regions, then expanded into Friesland and Belgium as well. In 1980, Végé acquired Unigro and its Vivo store format. Albada Jelgersma continued expanding the business through the 1980s, acquiring Kraan & Van Kuyk, another Végé wholesaler, in 1985, Spar wholesaler Van Silfhout as well as Coop Limburg two years later, and Verenignde Distributie Bedrijven in 1990.

In the 1980s, however, Unigro found itself under heavy pressure from the fast-rising Ahold group, and its Albert Heijn flagship. In response, Unigro decided to abandon both of its formats in favor of a new, larger self-service supermarket format, Super. The new format was an immediate success, and, backed by Unigro's string of acquisitions, established itself as a major name in the Dutch supermarket sector. Unigro nonetheless was forced to play catch up with the faster-growing Ahold concern. In 1997, however, Unigro moved into the country's top supermarket ranks with its agreement to merge with De Boer Winkelbedrijven. The new company, called Unigro De Boer, then launched a new store format, Super De Boer.

Three-Way Merger in the 1990s

De Boer had been founded by two brothers, Evert De Boer and Jan de Boer, who had gained experience as grocers in the Drente region within the Albino food store group active in the early 1920s. Evert de Boer left that group to open his own store in Hoogeveen in 1925, while Jan de Boer left the Albino group in 1932 to open a grocery store in Coevorden. The brothers each began opening new stores in the Drente region, yet operated as two separate and independent businesses until the 1970s.

Both De Boer operations launched their own self-service supermarket formats in 1952. In order to gain greater purchasing strength, they also helped form a new buying cooperative, ZICO. The Hoogeveen and Coevorden businesses also began working together directly in the 1950s and 1960s, coordinating advertising campaigns for the region. It was only after a fire destroyed the Hoogeveen De Boer's warehouse that the two companies decided to merge together, creating De Boer Winkelbedrijven in 1970. The De Boer family itself exited the company's direction by 1982.

De Boer expanded rapidly in the 1970s and early 1980s, at first by opening new stores. As the region became more and more saturated with supermarkets, however, the company began buying up a number of its ZICO partners. De Boer also launched a number of related retail formats, such as the Mitra liquor store in 1974 and the Trekpleister drugstore in 1980. De Boer fueled its expansion by a public offering in 1987. By 1995, the De Boer empire had topped 500 total stores, including 159 supermarkets. Two years later, the company merged with Unigro, and relaunched a combined supermarket format, Super De Boer. Yet the format barely had time to take hold—in 1998, the new management at Laurus N.V. decided to take a risk and convert all of its supermarkets under the single Konmar name. Laurus also moved to expand its foreign holdings in Belgium, but especially in Spain, where it began an aggressive series of acquisitions. By the early 2000s, the company already owned some 700 stores in that country.

Recovering in the New Century

The decision to focus on a single brand rapidly proved a disaster. By 2001, the Konmar concept had clearly failed to translate to the small and mid-sized supermarket formats which formed the largest share of the group's supermarket portfolio. At the same time, the company had expanded too quickly in Spain, and in Belgium as well, and its foreign operations had begun hemorrhaging badly. Adding to the company's woes was a brutal price war raging back home in the Netherlands. After Albert Heijn announced its decision to make permanent price reductions on a large number of products, Laurus was forced to follow suit. As a result, the company, which posted sales of more than EUR 6.5 billion in 2001, slid into losses, which mounted to EUR 128 million by 2002.

By 2001, the company was forced to seek help in shoring up its dwindling finances. Yet the EUR 250 million lifeline granted the company by its banks in 2001 proved unable to reverse Laurus's difficulties. Finally, in March 2002, the company agreed to a rescue package, in which 39 percent of its shares were transferred to France's retail powerhouse, Casino, in exchange for a new EUR 200 million capital injection. At the same time, Casino was granted the option to acquire a further 12 percent of Laurus in the future.

Key Dates:

1910:: Grocery buying cooperative Edah is created.
1917:: Edah is reformed as a public limited liability company, becoming NV Handel in Kolonie Waren Edah.
1925:: Theo Albada Jelgersma and son Ben Albada Jelgersma open wholesale grocery supplier in Breda; Evert De Boer opens grocery store in Hoogeveen.
1932:: Jan De Boer, brother of Evert, opens grocery store in Coevorden.
1967:: Unigro is formed.
1969:: Konmar supermarket format debuts.
1970:: De Boer store chains merge to form De Boer Winkelbedrijven.
1977:: Vroom & Dreesmann (later Vendex International) acquires Edah and Konmar.
1980:: Eric Albada Jelgersma acquires control of Unigro.
1997:: De Boer and Unigro merge to form Unigro De Boer; Vendex International spins off supermarket operations as Vendex Food Group.
1998:: Unigro De Boer merges with Vendex Food Group, forming Laurus N.V., which institutes single format strategy under Konmar name.
2002:: Casino of France acquires 39 percent of Laurus, which undergoes restructuring.
2003:: Laurus completes disposal of Spanish holdings and returns to multi-format operations.
2004:: Laurus rebrands most Konmar supermarkets as Edah and Super De Boer.

Under Casino's guidance, Laurus underwent a drastic restructuring. The company sold off the entirety of its Spanish holdings by September 2002, which were shortly followed by nearly all of its Belgian operations. Withdrawing to the Netherlands, the company's restructuring continued, with the shedding of a number of noncore holdings, including its Spar convenience store operations. By the end of 2002, the company's sales had been slashed back to just EUR 4.6 billion. Nonetheless, the company had successfully purged itself of its poorest performers.

Laurus has also reversed its single-format position and instead relaunched its popular Edah and Super De Boer formats. The company began testing a further conversion of much of its Konmar chain, retooling the smaller stores to the Edah and Super De Boer formats as well. Encouraged by an initial positive reaction, the company began a full-scale conversion, largely completed by mid-2004, leaving just 50 large-scale Konmar superstores. By then, Laurus's restructuring appeared to be succeeding—at the end of 2003, the company posted a profit of EUR 9 million on total revenues of EUR 4.1 billion. Laurus appeared prepared to continue making Dutch supermarket history in the new century.

Principal Subsidiaries

Assural BV; CV De Weerribben, Amsterdam (76.9%); CV Hijkerveld, Amsterdam (76.9%); De Boer Unigro Filialen BV; De Boer Unigro Groothandel BV; Echo SA (Belgium); Groenwoudt Food BV; Konmar BV; Laurus International BV; Laurus Nederland BV; Nieuwe Weme Supermarkten BV; Verenigde De Boer Unigro Beheer BV.