No end to CE slump
This month’s reshuffle at Corporate Express (CE) has done little to revive the company’s flagging share value.
Despite the departure of Frans Koffrie, the appointment of Peter Ventress as his replacement and the surprise capture of Office Depot’s Peter Damman, analysts remain unimpressed.
And despite the announcement that CE will focus on operating as a stand-alone, global B2B contract stationer, the rumours still persist of an uncertain future.
This month’s developments, which included details of a series of new goals for the company, is the result of a strategic review which commenced in March this year, and was aimed at ending recent speculation of a takeover or break up of the business.
CE said a "wide range" of strategic options were considered as part of the review, including sale, break-up and merger scenarios. "The conclusion is that the stand-alone scenario is in the best interest of our shareholders and other stakeholders," the company said in a statement.
A raft of strategic initiatives and organisational changes were also announced, which are intended designed to transform the company into a more "operationally focussed and sales driven" organisation.
The changes include an aim to increase share of wallet of its large customers, grow market share, improve its category offering, grow mid-market presence in US and Europe, strengthen its geographic footprint and the creation of one global management team. An average annual organic sales growth for global office products was targeted at over 6 percent for 2008-2010.
The leader of the operation will be Peter Ventress, who made the step up from head of the European operation to become CEO at the Netherlands-based company.
"The conclusions of our strategic review are very clear: The strategy to focus and build on our position as a global B2B player in the office supplies market is the best way forward," said Ventress. "It provides the greatest opportunity for value creation and growth. We operate in an attractive market, in which we have a leading position. We are convinced CE is well positioned to outperform the market, due to its great eCommerce and logistics system, scale, B2B market leading position and people. However, we will have to improve drastically our operational execution and performance in order to be able to capitalise on this position. It is all about Focus. Execute. Deliver."
CE identified four key strategic priorities to deliver profitable growth:
• Increase share of wallet with large clients. "The review identified that Corporate Express has an opportunity to increase the share of wallet of its largest corporate customers as well as to grow its share in this market."
• Improve category offering: "There is room to better coordinate the product offering across CE, to fully leverage its private brands programme and to rationalise the product range. New methods to manage categories are being introduced, all with the goal to deliver the right products to our customers in the most cost-efficient way."
• Grow mid-market share: "Currently only 20 percent of Corporate Express’ sales originate from the mid-market segment. Given the above average gross margins and the growth in this market, the company believes it is necessary and attractive to reinvigorate its mid-market approach. Initiatives have been launched in the US and Europe to increase the number of accounts and sales in this market, while at the same time reducing service costs."
• Strengthen geographic footprint: "There is opportunity to attain leading positions across Europe. Looking into the future there are also viable options in high growth emerging markets."
To deliver the four strategic priorities and further transition from a holding company to a "truly global" operating company, a newly-formed Executive Management Group (EMG), will lead the business.
"We have to transform radically our management structure and our ability to execute. Quite simply; we have to be better at the basics. Our decentralised structure is no longer appropriate. Now, our organisation has to mirror our unique position as a global pure-play B2B office supplies company, and ensure we achieve our strategic priorities," added Ventress.
"There will be changes in our management structure, which will allow us to be closer to the business and make us much more operationally focussed. It will also enable us to share best practices and improve the cost efficiency of our business. We are confident that the changes we are announcing today will deliver higher growth and higher margin and are for the benefit of shareholders, customers and employees."
The EMG consists out of the Executive Board members Peter Ventress (CEO) and Floris Waller (CFO) and George Dean (until his retirement). Jay Mutschler (president CE US) and Peter Damman (president CE Europe), Tim Beauchamp (logistics), Ron Lalla (merchandising) and Dick Dijkstra (IT) complete the EMG, with the people and organisation role not yet filled.
CE also announced a Q3 2007 trading update disclosing its estimated organic growth numbers for its North American and European activities.