Reitmans (Canada) Ltd. has lost a high-profile executive who was a potential candidate to eventually take the top job at Canada's premier specialty women's apparel chain.
Now Reitmans, whose voting shares are controlled by the family of the same name, will have to turn to succession planning. To be sure, Jeremy Reitman, 66, chairman and chief executive officer, isn't in a rush to leave.
Still, there's an urgency to preparing for strong leadership when the incumbent steps down. The CEO's job is getting more onerous in an increasingly competitive market, with more foreign chains setting up shop here; savvy U.S. discounter Target Corp. will open its first stores in 2013.
And Reitmans may have new internal challenges if it decides to make another acquisition, as Mr. Reitman has hinted is a possibility.
His brother, Stephen, who is president and chief operating officer at the retailer, could take the reins one day, although he keeps a low profile. There is no obvious member of the younger generation of Reitmans in the wings to move into the corner office.
The question of succession at Reitmans is sparked by the departure in mid-August of Pierre Lavallée. With clear CEO potential, he was a well-connected business adviser who was hired at Reitmans at the end of 2009. Previously, Mr. Lavallée was a senior partner at prominent management consultancy Bain & Co. Prior to that, he served as a trade commissioner, including a posting at the Canadian embassy in Japan.
Mr. Lavallée didn't leave on bad terms with Reitmans, but rather for family-related reasons. Both Reitman brothers remain engaged in their current jobs and aren't looking to leave, Tal Woolley, a retail analyst at RBC Dominion Securities, said
"However, questions regarding succession will likely always be a topic for Reitmans, given its more limited investor outreach strategy," Mr. Woolley said in a note on Aug. 17. "The CEO remains the sole public face of the company."
Among possible successors are one of the presidents of Reitmans' various chains, including its namesake flagship one, Smart Set, Penningtons and Addition Elle, said Neil Linsdell, an analyst at Versant Partners.
The issue of succession planning arises as the Montreal-based merchant prepares to release on Tuesday its second-quarter results, which are expected to show a deterioration in sales and profit from a year earlier. Already the first quarter was a poor one, with same-store sales sliding 8.7 per cent.
Cold and rainy weather played havoc with many merchants' business this spring, but the conditions improved over the course of the summer, which probably helped Reitmans. Even so, consumers remain guarded in their spending as they grapple with economic uncertainty and efforts to pay down debt.
Mr. Linsdell is even more bearish about Reitmans' second-quarter prospects than other analysts. He points to rising labour and other costs, heightened competition, discounting and the consumer pullback. "There's reason to be cautious right now."