Galen Weston will step back from day-to-day operations at Loblaw Cos. Ltd. L-T -1.09%decrease by early next year, the company announced on Tuesday, saying it has hired European retail executive Per Bank to take over as president and chief executive officer.
Mr. Bank is currently the CEO of Salling Group A/S, Denmark’s largest retailer with roughly $13-billion revenue in 2021, the most recent year for which figures were available. Salling operates 1,700 grocery stores in three countries as well as department stores. Loblaw, Canada’s largest retailer, operates more than 2,400 stores across various grocery banners as well as the Shoppers Drug Mart chain, with $56.5-billion in revenue last year.
Mr. Weston will continue in his role as chairman of Loblaw’s board, as well as chair and CEO of parent company George Weston Ltd. In that capacity, he will continue to oversee the “vision, strategy and capital allocation” of the family-controlled companies, he said on a conference call Tuesday to discuss the announcement.
“I’m not leaving. I’m stepping back into what I consider to be my natural role as controlling shareholder,” Mr. Weston told analysts on the call.
The search for a new CEO began in August, 2022, precipitated by the planned retirement of chief operating officer Robert Sawyer at the end of this year.
Loblaw board says Galen Weston is underpaid, boosts compensation
Mr. Sawyer came out of retirement to join the company in 2021, when Mr. Weston returned as president following the departure of Sarah Davis. At the time, Loblaw also replaced chief financial officer Darren Myers with George Weston CFO Richard Dufresne, who will continue as CFO of both companies.
Since then, the executive team has been working to boost Loblaw’s performance, undertaking a strategic review of its operations designed to narrow the company’s focus and get back to what Mr. Weston referred to as “retail fundamentals.”
“The plan was always that Robert would only be with us for a couple of years,” Mr. Weston wrote in an internal memo to Loblaw staff on Tuesday. He said that the appointment does not signal any intention to change the company’s strategic direction.
“The intent is to continue to execute against the strategic path that has been developed by Richard, myself and Robert,” Mr. Weston said on the call.
Over the past two years, that leadership team has also seen Loblaw through a time of soaring food inflation that has contributed to higher revenues and profits in the grocery industry. Mr. Weston, along with other industry executives, has faced questions about whether retailers are doing enough to mitigate the sharp rise in the cost of basic necessities.
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Mr. Weston, as a public figure representing the billionaire Weston family and as advertising spokesman for the retailer, has been in the line of fire over the issue. But that was not a factor in his decision to step back, Loblaw spokesperson Catherine Thomas said.
“At the end of the day, this will be nearly a two-year process. To think that it is at all reactionary would be wrong,” Ms. Thomas said. She added that Mr. Weston has made fewer appearances in Loblaw ads over the past year, but did not say whether he would continue as spokesperson in future. “That is a decision for another day,” she said.
On the call Tuesday, Mr. Weston alluded to Mr. Bank’s experience in a highly public CEO role, saying it would help him navigate the position Loblaw occupies in Canada.
“He has been leading an organization that has an outsized cultural and financial place inside his country, and that’s the case for Loblaw,” Mr. Weston said. “We’re a big company in a small country, and that comes with different leadership challenges and opportunities.”
On Tuesday, Statistics Canada reported that inflation began to cool in March, including some improvements in the price of groceries, which rose by 9.7 per cent compared with the prior year, down from increases of more than 11 per cent in recent months. But food is still outpacing the overall inflation rate, which was 4.3 per cent in March compared with the prior year.
In that climate, Loblaw has benefitted from a shift to discount grocery stores such as No Frills, which make up roughly 60 per cent of the retailer’s store network.
“Mr. Bank will be taking the helm of a Loblaw enjoying strong momentum and results, well-positioned against the backdrop of high prices and value-seeking, cash-squeezed consumers,” RBC Capital Markets analyst Irene Nattel wrote in a research note on Tuesday.
In Mr. Bank, Loblaw has also hired an executive with experience serving as CEO of a family-controlled company with a long history. Salling was founded in 1906, and over the course of 94 years, the company was led by just two CEOs, the founder and his son. Mr. Bank became the fourth CEO in Salling’s history in 2012, growing the retailer’s market share by more than 20 per cent, and leading a number of acquisitions, including the Polish operations of Tesco and Toys “R” Us in Denmark.
Historically, as with Ms. Davis, the top role at Loblaw did not include the title of CEO, and reported to Mr. Weston directly; Mr. Bank adds that title and will report to the board.
“There’s important symbolism in that. Having said that, this is a controlled company,” Mr. Weston said. “… And the long-term strategic vision of the company – it’s essential that there’s a high level of alignment between myself and any chief executive or any key operating executive.”
Mr. Weston also noted that Mr. Bank has experience beyond running retail stores, including sitting on the board of the Bank of Denmark, providing the central bank with perspectives on consumer behaviour.
Mr. Bank will join Loblaw by the first quarter of 2024.
