Selling Grips Royal Ahold After Accounting Blowup
An accounting blowup sparked a massive selloff in one of Europe's biggest retailers Monday, as Royal Ahold (AHO) lost more than half its value prior to the New York open.
Ahold is based in Amsterdam but the problem is in the U.S., where the company operates 1,600 supermarkets and is a big distributor of food to restaurants, hotels and other outlets. That's where a $500 million accounting overstatement occurred in 2001 and 2002.
The irregularities, which were uncovered by auditors Deloitte & Touche in their examination of 2002 results, resulted in the resignation Monday of Chief Executive Officer Cees van der Hoeven and Chief Financial Officer Michael Meurs. The company also warned that 2002 profits will be significantly lower than expected due to the restatements.
In the Instinet premarket session, Ahold's American depositary receipts were down $6.75, or 63%, to $3.94.The company named supervisory board Chairman Henny de Ruiter its acting CEO. "My priority will be to stabilize the business and get to the bottom of the problems ... I am not in the least bit pessimistic about where we will be in a year from now," Ruiter said.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV