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Blue Square announced yesterday that Yoram Dar would be ending his term as president and CEO of the supermarket chain after 4.5 years on the job and more than 27 years at the company, and will be replaced by Gil Unger, who has led IKEA Israel for three years and previously managed SuperPharm.

Sources in the food industry say that the changing of the guard at Blue Square is based on an assessment by Blue Square's controlling shareholders that Unger is better equipped to lead the supermarket chain through a period of dramatic changes mandated by an increasingly competitive market.

Blue Square's official explanation for the management change attributed Dar's departure to a dispute over terms of employment. Dudi Weissman, the controlling shareholder in the Bronfman-Alon group that acquired a 78-percent stake in Blue Square last June, commented that the company thanks Dar for his long service. He began as a store manager and reached the top of the pyramid, Weissman said. Dar will remain an employee of the company at least until his contract expires on December 31, 2004.

He added that Blue Square had carried out a streamlining plan encompassing the headquarters, which also included cutting staff. According to Weissman, "Dar had asked for a raise of many millions of dollars a year in salary and in perks. We did not think it proper, at a time of increasing efficiency at the company, to accede to the request for a substantial increase in Yoram Dar's employment terms," he said.

Weissman emphasized that he had no disagreement with Dar over the company's strategic plan. He noted, however, that "I found that with Unger, our marketing language is the same." Weissman added that "Unger will bring to the company the marketing dimension that is missing. We won't be in a situation in which another chain - private or public - opens a branch near us and earns money. So anyone planning to open a branch near us should think good and well about this, because he won't make money."

Weissman vowed that Blue Square would aggressively defend its territory and cited its experience in Haifa as proof. According to Weissman, the Haifa Blue Square store increased its sales by 15 percent after a competing chain opened nearby. "We'll do the same thing in Kfar Saba and anywhere else," he declared.

Dar emphasized yesterday that he was not being fired. "I informed the owners several days ago that I am stepping down from my position and I gave the owners time to find a replacement," Dar said.

The outgoing CEO also noted some of his achievements at Blue Square: "I led the company from a cooperative to private ownership in a way that was profitable to all sides. We are a retail chain that achieved fine results during the past years and this is why four groups, including Paz Kardan, were interested in acquiring Blue Square." He claimed credit for the company's streamlining plan, its trademark strategy and the bond issue that raised NIS 400 million.

Senior industry sources give high marks to Dar's cautious management strategy at Blue Square, as opposed to the massive expansion pursued by the rival Supersol chain. Blue Square acted more quickly than Supersol in reducing surplus commercial space: Since the year 2000, Blue Square closed 30 stores and announced in November 2003 that another 10 would be closed in 2004. At the same time, Blue Square developed its Mega chain that currently includes 30 stores, with another four to six slated to open this year.

Sources near Unger say he prefers to move to Blue Square due to uncertainty over IKEA's future development. That is on hold for now, because of ownership issues. The Blue Square Cooperative Society has to sell its IKEA holdings pursuant to a court ruling, but the move has been delayed for more than a year.

The sources add that Unger can bring value to Blue Square by virtue of his experience in contending with discount chains. He is an expert on pricing strategy, they add, thanks to IKEA's "better everyday life through low price" strategy.