After years of racing to spruce up its stores and ensure products get to shelves on time, Loblaw Cos. Ltd is moving to its next stage of growth under a new leader even as competition tightens.
Vincente Trius took over as president in August from Allan Leighton, both of them having got crucial experience as executives at discount titan Wal-Mart Stores Inc.
Now all eyes are on Mr. Trius, who will release his first set of quarterly financial results on Wednesday in his new position. He has his plate full: Supermarket sales in Canada are barely budging, and Wal-Mart is rapidly expanding its food offerings. In 2013, another U.S. discount giant – Target Corp. – will arrive in Canada to squeeze Loblaw even more. Even upscale Whole Foods Market is planning more stores in this country.
Mr. Trius will increasingly feel the pressure to improve Loblaw’s performance in the food aisles while focusing on new areas of growth for the country’s largest grocer. They include financial services, mobile phones, health and wellness goods, ethnic-targeted products and Joe Fresh style fashions.
“Even a small misstep could plunge the company back into an extended development investment cycle and further delay the real earnings progress investors have been pining for,” retail analyst Perry Caicco of CIBC said in a recent note.
Analysts got a chance to meet with Mr. Trius last month. In many ways, “he is a breath of fresh air at a company that has been inwardly-focused and overly preoccupied with infrastructure,” Mr. Caicco said after the meeting, which stayed away from a discussion of the new president’s strategy at Loblaw.
“We believe Mr. Trius is probably the right man for the job, but the job is enormous,” Mr. Caicco said.
Other analysts agreed. “We came away from the meeting with a positive first impression,” said Michael Van Aelst, an analyst at TD Securities. “There is no doubt that Mr. Trius brings to the table an impressive pedigree with experience ranging from strictly operations to turnarounds, and building businesses from nothing.”
Still, Loblaw has struggled to make sales gains. In its last quarter, same-store sales slipped 0.4 per cent, compared with an increase of 1.7 per cent at Sobeys, a unit of Empire Co. Ltd. , and up 0.5-per-cent at rival Metro Inc. Those sales at outlets open a year or more are considered a key retail measure.
Galen G. Weston, Loblaw’s executive chairman and a member of its controlling family, said recently that the retailer experienced “some wobbles” as it moved through an executive shuffle and new systems.
“We’re holding our own, by and large, in a pretty difficult market environment,” Mr. Galen told a conference in September. “Consumer confidence is low; you don’t see much growth coming from any of us other than those who are aggressively putting in new footage.” The key rival that is expanding its store space is Wal-Mart, which he described as a “disruptive” player.