The move was announced on the same day that the grocer’s controlling shareholder, George Weston Ltd. , announced it is putting its Weston Foods bakery business up for sale, in order to focus on its real estate holdings and retail operations.
The division produces bread, rolls and baked goods in Canada and the United States, under brands such as Wonder Bread, ACE Bakery, Country Harvest, D’Italiano and others. The bakery business had $2.1-billion in sales in 2020, representing less than 10 per cent of George Weston’s overall business.
The leadership is changing just four years after Ms. Davis was appointed to the top job, which Mr. Weston previously held from 2014 to 2017. The company described the departure as an early retirement for Ms. Davis, who is 53.
In addition to running the retailer, Mr. Weston will continue as chairman and chief executive officer of George Weston, which owns 52.6 per cent of Loblaw. The company also owns a 61.8-per-cent interest in Choice Properties Real Estate Investment Trust , which holds a broad portfolio of retail, industrial and office properties, many anchored by Loblaw stores.
“At Loblaw, we have financial momentum, strategic growth initiatives with real weight, and confidence in our core retail network. We also have work to do,” Mr. Weston said on a conference call with analysts on Tuesday. That work will build on the company’s strengths, he added, which include a vast network of stores, popular private-label brands such as President’s Choice and No Name, and the PC Optimum loyalty program, which provides the retailer with vast amounts of data on people’s shopping habits.
“Business performance at Loblaw continues to improve. It has since the end of the second quarter last year,” Mr. Weston said. “... Loblaw’s strengths are extremely compelling. ... So we don’t anticipate a major shift in strategy.”
The company also announced that George Weston president and chief financial officer Richard Dufresne will expand his role to include CFO of Loblaw, replacing Darren Myers, who will also leave the company on May 6. George Weston board member Robert Sawyer, whose former roles include chief operating officer of grocer Metro Inc. and chief executive officer of Rona Inc., will join Loblaw as chief operating officer.
“[Mr. Sawyer] is regarded widely as a respected and capable leader in retail, not a catalyst for change,” said Jim Danahy, CEO of retail consultancy CustomerLAB, adding that the change represents “steady hands” leading the business.
Ms. Davis’s departure also represents a symbolic shift, said Sylvain Charlebois, senior director of Dalhousie University’s agri-food analytics lab.
“We need more woman leaders in the grocery business. I’m concerned that this would send the wrong signal to women who aspire to make a difference in the business,” Prof. Charlebois said. “More diversity in leadership is sorely needed.”
The management shuffle signals “what is likely to be a heightened focus on operational efficiency and productivity, which has been somewhat lacking,” Royal Bank of Canada analyst Irene Nattel wrote in a research note on Tuesday.
Ms. Davis joined Loblaw in 2007, at a time when the grocer was struggling with a faltering supply chain and weak financial results. Ms. Davis was part of the leadership team that went about addressing those challenges. In 2010, she was named chief financial officer, and in 2014 she was appointed chief administrative officer and president in 2017.
“Did [Galen Weston] ever fully step away? No,” said David Kincaid, founder and chair of consultancy Level5 Strategy in Toronto, which has done work with Loblaw in the past. “Look at the communication to the consumer throughout the pandemic. Who did it come from? ... It’s in his bloodstream. It’s part of the family.”
It is unclear whether the management shuffle is designed as a permanent measure or a temporary one while the company seeks out new leadership, Bank of Nova Scotia analyst Patricia Baker wrote in a research note on Tuesday. “At the end of the day, what we are looking for is more consistent day-to-day execution. The new team will have to work hard to deliver that, and if they do so, [Loblaw] shares will be viewed in a new light.”
After an initial boost in the early days of the pandemic when grocery sales took off, Loblaw’s stock has flagged somewhat this year. On Tuesday the share price rose by 3.5 per cent to $69.29.
The leadership change will occur after Loblaw’s annual meeting on May 6.
For George Weston, selling the bakery division is a parting of ways with a relatively small part of the business, but one that is intrinsically tied to the company’s roots. The billionaire Weston family’s retail empire began 139 years ago when George Weston went into business for himself by buying a bread route in Toronto.
The sales process will be launched in the coming months, and George Weston has not yet been approached by any buyers, Mr. Dufresne said. In recent months, the company had been considering acquisitions to scale up the Weston Foods business and keep it within the company, but ultimately decided to sell instead
“We know Weston Foods has ample room to grow, but it’s best positioned to do so in other hands,” Mr. Weston said.
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