Inside This Issue - News
Loblaw’s new lineup
July 28th, 2014
BRAMPTON, Ontario – Galen Weston, scion of the Weston family that controls Loblaw Cos., Canada’s biggest supermarket chain, has assumed another management position at the retailer.
Weston added the role of president to his existing duties as Loblaw executive chairman, the company said on July 17.
Weston succeeds Vicente Trius, the former Walmart executive who had been president of Loblaw since 2011. The company said that Trius was leaving for family reasons and that he was returning to Brazil.
Loblaw also announced additional changes, including the exit before the end of the year of Shoppers Drug Mart Corp. (SDM) president Domenic Pilla.
Pilla will be succeeded by Mike Motz, Loblaw’s executive vice-president and chief merchandising officer.
"Domenic is leaving, as he would like to continue his career by pursuing opportunities to lead a widely held public company, and we are respectful of his decision," Weston said in a statement.
Under Weston’s leadership, Loblaw purchased SDM last year in a $12.4 billion (Canadian) deal uniting Canada’s largest drug chain and the nation’s biggest supermarket operator. Weston also recently spun off the retailer’s real estate assets into a real estate investment trust.
Analysts said the management changes signal that the Weston family, the grocer’s largest shareholder, is moving to further assert control at a time of change in Canada’s retail sector.
"It shouldn’t surprise anyone that the family, through me, is getting closer to the business to make sure that the vision that we’ve established, that supported the investment, actually gets delivered and executed," Weston said in a conference call with analysts following the announcement of the management moves.
Weston said management changes can be "destabilizing," but that Loblaw was in a position to cope with the turmoil. "If you had to pick a time, this is a good time given the strength of the business, the consistency with which the business has performed and the shift in the strategy and priorities that need to be executed going forward," he said.
In other management moves, Loblaw appointed a new chief financial officer, naming Richard Dufresne to the post. Dufresne, the CFO at parent George Weston Ltd., replaces Sarah Davis, who becomes Loblaw’s chief administrative officer, responsible for supply chain, information technology and Loblaw property and strategy.
And Grant Froese, previously chief administrative officer, becomes chief operating officer of the company.
The changes come as Canada’s grocery market has grown increasingly competitive, with Walmart Canada aggressively expanding its food offerings and Target Corp. entering the market last year with 124 new stores. Additionally, the country’s second-largest supermarket operator, Sobeys Inc., has increased its footprint as a result of its acquisition last year of Safeway Canada.
Loblaw this year has been accentuating food, especially fresh food that can generate higher profit margins. The company has launched the "Bring Healthier Home" campaign, featuring new products designed to make it easier for shoppers to make nutritious meals.
The grocery battles have eroded retailers’ already thin profit margins, which have also been hit by weakness in the Canadian dollar, which raises the cost of imported fruits and vegetables purchased in U.S. dollars.
Despite the turmoil, Loblaw was prepared in late July to post improvement in its second quarter financial results, Weston said during the conference call.
The second quarter results will be the first time that Loblaw will consolidate the performance of SDM. “Our two businesses are working well together, and we are on track to deliver the first $100 million in synergies by the end of the first quarter of 2015,” Weston said in a statement.
Loblaw’s corporate and franchised banners fly over 1,045 stores. Trade names include Loblaws, Atlantic SaveEasy, Extra Foods, Fortinos, No Frills, Provigo, Your Independent Grocer, T&T and Zehrs Markets.
Loblaw stores dispense more than 8,000 private label products, including its signature President’s Choice brand, as well as traditional and organic grocery fare. Loblaw is also Canada’s largest wholesale food distributor. Plus, Loblaw operates the Joe Fresh clothing line and the President’s Choice financial services division.