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American Morning
Minding Your Business: Supermarket Spills on Stock Market
Aired February 25, 2003 - 07:46 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BILL HEMMER, CNN ANCHOR: A local supermarket may have more to worry about than bad produce. It may have a case of bad bookkeeping.
Andy Serwer is checking our business right now and minding it for everyone. Good morning to you.
ANDY SERWER, "FORTUNE" MAGAZINE: Good morning to you, Bill.
Let's talk about the markets yesterday first. Not a good day plain and simple. The Dow was down 159 points.
I've found the silver lining to this, though, Bill.
HEMMER: Yes? Tell us.
SERWER: It could have been worse. It could have been 200 points.
HEMMER: And it could have been 300.
SERWER: It could have been 300. See what I mean? I'm finding a good sign.
HEMMER: And who knows where we'll go today?
SERWER: I'm finding a good sign. You know, and you talked about it before I was on here that accounting scandals don't seem to be over. War jitters, the No. 1 problem. But No. 2, we thought this whole wave of accounting scandals was over. It is not over. Ahold, a Dutch retailer, supermarket giant, just really hit the wall yesterday. Touched on that a little bit in yesterday's program. More details came out today.
Why do we care about a Dutch food store?
HEMMER: Tell us.
SERWER: Well, because they are one of the largest supermarket chains in the United States. They own Stop & Shop, they own Bruno's, they own Giant Food. And we'll talk about that.
Here you go. Stop & Shop, 321 -- 1,600 stores in 20 states overall. Stop & Shop is the largest supermarket chain in New England. Peapod online. I mean, all of these names are familiar to everyone.
HEMMER: Yes. SERWER: So, you know, it's just a huge American problem. A lot of people saying, well, it's a Dutch situation. They're the company that had the accounting problem. But actually, the problems took place here in the United States, a $500 million accounting overstatement. It basically has to do with rebates paid from the manufacturer they were booking as revenue. It gets real complicated real fast. The CEO left, the CFO left. The stock just tanked yesterday. It was down over 60 percent.
And it just served as a reminder -- there you can see. Do the math on that.
HEMMER: Wow!
SERWER: Sixty one percent in one day. And it just served as a reminder that this stuff is out there. People can't trust the markets. They can't trust their stocks. And they're concerned about their 401(k). So that's what...
(CROSSTALK)
HEMMER: On top of all of the Iraqi issues as well.
SERWER: Yes, it's (UNINTELLIGIBLE).
HEMMER: Do you think it's fair to put this Royal Ahold situation in the same category as Enron?
SERWER: Well, they're calling it Europe's Enron, but it's a little bit smaller. The real question is: Will this impact the stores that we all go to? You have to wonder that maybe at some point it will, that they'll start to cut back and scrimp and crimp on things.
PAULA ZAHN, CNN ANCHOR: Can the two of you please mind your English today?
SERWER: Why is that? The Royal Ahold? Listen, that's the name of the company.
HEMMER: What's on your mind?
SERWER: We don't make this up. We don't make this up. It's just...
ZAHN: Sorry, I couldn't let that one go by.
SERWER: It's a direct translation from the Dutch, OK?
HEMMER: Well, listen, Andy has been a Royal Ahold for several weeks now, so...
SERWER: It's the Dutch. I can't -- you know, I can't help it, Paula. I'm glad you picked up on that though.
ZAHN: We have to put the graphic back up there, so people know that it is actually the name of the company.
SERWER: It is the name. Nothing we can do.
HEMMER: And it's only Tuesday.
SERWER: Yes.
HEMMER: And we're already getting away with this.
SERWER: They should change their name.
ZAHN: Thanks, gentlemen.
HEMMER: See you, Andy.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
Market>
Aired February 25, 2003 - 07:46 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BILL HEMMER, CNN ANCHOR: A local supermarket may have more to worry about than bad produce. It may have a case of bad bookkeeping.
Andy Serwer is checking our business right now and minding it for everyone. Good morning to you.
ANDY SERWER, "FORTUNE" MAGAZINE: Good morning to you, Bill.
Let's talk about the markets yesterday first. Not a good day plain and simple. The Dow was down 159 points.
I've found the silver lining to this, though, Bill.
HEMMER: Yes? Tell us.
SERWER: It could have been worse. It could have been 200 points.
HEMMER: And it could have been 300.
SERWER: It could have been 300. See what I mean? I'm finding a good sign.
HEMMER: And who knows where we'll go today?
SERWER: I'm finding a good sign. You know, and you talked about it before I was on here that accounting scandals don't seem to be over. War jitters, the No. 1 problem. But No. 2, we thought this whole wave of accounting scandals was over. It is not over. Ahold, a Dutch retailer, supermarket giant, just really hit the wall yesterday. Touched on that a little bit in yesterday's program. More details came out today.
Why do we care about a Dutch food store?
HEMMER: Tell us.
SERWER: Well, because they are one of the largest supermarket chains in the United States. They own Stop & Shop, they own Bruno's, they own Giant Food. And we'll talk about that.
Here you go. Stop & Shop, 321 -- 1,600 stores in 20 states overall. Stop & Shop is the largest supermarket chain in New England. Peapod online. I mean, all of these names are familiar to everyone.
HEMMER: Yes. SERWER: So, you know, it's just a huge American problem. A lot of people saying, well, it's a Dutch situation. They're the company that had the accounting problem. But actually, the problems took place here in the United States, a $500 million accounting overstatement. It basically has to do with rebates paid from the manufacturer they were booking as revenue. It gets real complicated real fast. The CEO left, the CFO left. The stock just tanked yesterday. It was down over 60 percent.
And it just served as a reminder -- there you can see. Do the math on that.
HEMMER: Wow!
SERWER: Sixty one percent in one day. And it just served as a reminder that this stuff is out there. People can't trust the markets. They can't trust their stocks. And they're concerned about their 401(k). So that's what...
(CROSSTALK)
HEMMER: On top of all of the Iraqi issues as well.
SERWER: Yes, it's (UNINTELLIGIBLE).
HEMMER: Do you think it's fair to put this Royal Ahold situation in the same category as Enron?
SERWER: Well, they're calling it Europe's Enron, but it's a little bit smaller. The real question is: Will this impact the stores that we all go to? You have to wonder that maybe at some point it will, that they'll start to cut back and scrimp and crimp on things.
PAULA ZAHN, CNN ANCHOR: Can the two of you please mind your English today?
SERWER: Why is that? The Royal Ahold? Listen, that's the name of the company.
HEMMER: What's on your mind?
SERWER: We don't make this up. We don't make this up. It's just...
ZAHN: Sorry, I couldn't let that one go by.
SERWER: It's a direct translation from the Dutch, OK?
HEMMER: Well, listen, Andy has been a Royal Ahold for several weeks now, so...
SERWER: It's the Dutch. I can't -- you know, I can't help it, Paula. I'm glad you picked up on that though.
ZAHN: We have to put the graphic back up there, so people know that it is actually the name of the company.
SERWER: It is the name. Nothing we can do.
HEMMER: And it's only Tuesday.
SERWER: Yes.
HEMMER: And we're already getting away with this.
SERWER: They should change their name.
ZAHN: Thanks, gentlemen.
HEMMER: See you, Andy.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
Market>
