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.