A sweeping management shuffle at Loblaw Cos. Ltd. signals that the Weston family, the grocer’s largest shareholder, is moving to further assert control at a time of massive change at the retailer.
Loblaw, which this year bought Shoppers Drug Mart for $12.4-billion, on Thursday announced Galen G. Weston as president, adding to his role as executive chairman. He replaced Vicente Trius, a former executive at discount titan Wal-Mart Stores Inc. who oversaw operational improvements at Loblaw’s supermarket chains. He is leaving for family reasons and returning to Brazil, the company said.
Mr. Weston said his family and George Weston Ltd., which owns 43 per cent of Loblaw, want to ensure that their investments over the past year continue to bear fruit, including the Shoppers takeover and last year’s spinoff of the retailer’s real estate into a Real Estate Investment Trust.
Mr. Weston’s appointment as president is the first time in about four decades that a family member has held that position.
“It shouldn’t surprise anyone that the family, through me, are getting closer to the business to make sure that the vision that we’ve established – that supported the investment – actually gets delivered and executed,” Mr. Weston told an analyst conference call.
George Weston plans eventually to take control of the country’s largest grocer, Loblaw spokesman Kevin Groh said in an e-mail. He said Loblaw will buy back shares.
The latest management shuffle creates more uncertainty for Loblaw as it continues its multiyear recovery efforts. It is just beginning to enjoy sales improvements at its core grocery division but still has more work to do to revamp its information technology systems. Now Mr. Weston needs to keep bolstering the business while folding Shoppers’ operations into its own in an increasingly competitive, low-margin field.
“The Weston family, given the enormity of the change, is shoring up its influence to best ensure that the vision is delivered and executed,” said Kenric Tyghe, an analyst at Raymond James Ltd.
The executive changes could be good news for investors, including the family. Mr. Weston’s approach is “more in line with investors’ views than was the case with the departing president, which is not entirely surprising given that Mr. Weston’s family is the largest shareholder” of Loblaw, said Irene Nattel, retail analyst at RBC Dominion Securities.
Mr. Trius has overseen important initiatives in offering customers more service, fresher produce and more discounts, she said. But the former president “was new to Canada and the Canadian retail landscape, and investors had at times questioned his feeling for this marketplace,” Ms. Nattel said. The Weston family may want to see fewer promotions and more money flowing to investors, Mr. Tyghe suggested.
In any case, Loblaw, “like many family businesses, can be a challenging environment for senior managers,” said Perry Caicco, retail analyst at CIBC World Markets.
In other changes, Domenic Pilla, president of Shoppers, is leaving the retailer at the end of the year. He would “like to continue his career by pursuing opportunities to lead a widely-held public company,” Mr. Weston said. He will be replaced by Mike Motz, currently Loblaw’s executive vice-president and chief merchandising officer who was a former Shoppers executive. As well, Richard Dufresne is becoming Loblaw’s chief financial officer along with the same role at parent George Weston. He replaces Sarah Davis, who becomes chief administrative officer.
Mr. Weston, who has been executive chairman since 2006, acknowledged that management change generally “has the potential to be a little de-stabilizing ... There has been a lot of management change at Loblaw certainly over the last eight or nine years and that’s never a good thing.”
But he said management’s approach needs to change as the business changes. Given Loblaw’s strengthening operations and strategic shifts, the current timing of the changes is a relatively good one, he said.
Referring to himself, he said: “This is not somebody who has to learn the business; this is not somebody who has to get into the details. This is someone who is already very close to it in many respects. It is business as usual.”
The changes come in an intensely competitive grocery field, with giant U.S.-owned Wal-Mart Canada Corp. aggressively expanding its food offerings while U.S. rival Target Corp. entered this country last year, with almost 130 stores today. Meanwhile, Sobeys Inc., the country’s second-largest grocer after Loblaw, is moving quickly to improve its operations after it acquired Safeway Canada for $5.8-billion last fall.
But while retailers’ sales gains have been squeezed over all in a tighter market, Mr. Weston said Loblaw has enjoyed improvements in its second quarter, whose results will be released on July 24. He said the company will post strong quarterly same-store sales, which are sales at outlets open a year or more and considered a key measure of retail health.