ARLINGTON, Va., May 7 (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, aiming to make their operations more efficient and profitable.
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 its plans would mean a one-time cost of about $500 million dollars, 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)