May 7, 2019 / 7:33 PM / 6 months ago

Nestle switches delivery model for some U.S. frozen foods, cuts 4,000 jobs

FILE PHOTO: The Nestle logo is seen during the opening of the 151st Annual General Meeting of Nestle in Lausanne, Switzerland April 12, 2018. REUTERS/Pierre Albouy/File Photo

ARLINGTON, Va. (Reuters) - Nestle, the world’s largest packaged food company, said it plans to abandon direct-store delivery of frozen pizza and ice cream in the United States, a move that will cut 4,000 jobs.

Instead of delivering frozen pizzas and ice cream directly to stores, Nestle said, it will switch to the network of warehouses it already uses for frozen meals and snacks.

Nestle said the new model would make operations more efficient and profitable, but it would have to shut eight company-owned frozen distribution centers and its frozen inventory transfer points.

Nestle said its plans would mean a one-time cost of about $500 million, and a one-time negative sales impact of about $450 million.

The move will result in the closure of eight company-owned frozen distribution centers and frozen inventory transfer points, the maker of DiGiorno pizza and Edy’s ice cream said on Tuesday during an investor presentation.

“This is massive ... in terms of the value it can translate into,” Chief Executive Mark Schneider said.

Investors have long pressed Nestle to improve the performance of its frozen food business. Demand for frozen food in the United States - where Nestle leads the market by share - has exploded in recent years among millennials looking for convenient, healthy ready meals.

Reporting by Martinne Geller, Richa Naidu and Silke Koltrowitz; Editing by Dan Grebler

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