Winnipeg Free Press - PRINT EDITION

Loblaw president named Business Newsmaker of '13

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TORONTO -- He's been a familiar face to Canadians for years -- approachable, friendly, and asking them to shop at his family's grocery stores.

Behind the scenes, he also helped lead Loblaw's restructuring efforts at a time of intense competition while pushing green, organic and fresh products.

But it was his role in one of the biggest takeovers in the country's retail history, as well as his strong stance on the need for change in Bangladesh after the Dhaka factory collapse in April, that won Galen G. Weston the title of Canadian Press Business Newsmaker of the Year for 2013.

Weston received about 22 per cent of the votes, followed by BCE chief executive George Cope and former BlackBerry CEO Thorstein Heins, who tied for second place with 17 per cent of the votes each.

"It's not just one of the largest deals this year -- it's one of the largest deals in Canada ever," Derek DeCloet, Editor of Report on Business at the Globe and Mail, said in voting for Weston.

"It will shape the future of the Canadian retailing sector."

"Tough call here. I voted for Weston, being at the centre of not one, but two of the top business stories of the year," said Adam Nyp, news director at CIHR in Woodstock, Ont.

It was a busy year for Weston, whose family makes the list of richest Canadians with a fortune that tops $10 billion.

Loblaw (TSX:L) moved to acquire Shoppers Drug Mart (TSX:SC) in a blockbuster $12.4-billion deal that will allow it to better compete against retail giants, such as Walmart, and provide cash flow of about $1 billion to pay down debt.

"There are many other retailers involved here and the way that we're going to make lasting change in countries like Bangladesh... is to act as an industry."

-- Galen G. Weston

The company said it wouldn't be appropriate for Weston to comment until the deal closes. Shoppers' shareholders recently voted in favour of the takeover offer and the deal is before the federal competition bureau for approval.

During the summer, the company also spun off its real estate holdings into a new publicly traded trust, Choice Properties (TSX:CHP.UN), which remains majority-owned by Loblaw.

Since the drugstore deal, the company, which owns Loblaws, Real Canadian Superstore, President's Choice and several other grocery brands as well as the Joe Fresh clothing line, has said it remains focused on winning over customers with lower prices and a bigger selection of fresh foods.

It's not yet back to the point of growing its profits, as it struggles to draw in shoppers in an increasingly competitive retail environment that pits it against Sobeys as well as U.S. retailers such as Walmart, Target and Costco. But the company has come a long way from where it was when the younger Weston took over from his father, W. Galen Weston, as executive chairman of Loblaw in 2006.

"Loblaw stores were in a bit of disarray. He was new, they had distribution issues and they had strategy issues and they were turning over some senior personnel as they modified the distributions," said Ken Hardy, a marketing professor emeritus at Western University's Richard Ivey Business School.

"He was so youthful to take over a major chain and there was this imminent threat of Walmart's food empire moving north, so yes, I think there was some skepticism," Hardy said.

"But the board plugged in some good people and they went ahead and made the changes, so he had support."

Gord Nixon, chief executive of RBC and a Weston family friend, said the younger Galen and his team should be credited for their role in the restructuring of Loblaw when industry margins are shrinking.

"I think the Shoppers Drug Mart deal certainly has the potential to be a real home run for them and give them the opportunity to shift their strategies to address some of the changes that are taking place in the marketplace," said Nixon.

"It's been a transformational year all around given the two big transactions... and some of the progress the company has made in terms of addressing some of their cost issues and efficiency issues."

For several years Weston, whose family is Loblaw's biggest shareholder, has helped personify the brand and differentiate it from competitors that have no official spokespersons.

Sobeys recently hired British celebrity chef Jamie Oliver to promote its stores. He had previously done the same for Sainsbury's, a U.K. grocery chain.

Weston also positioned himself as a champion for healthy, organic and ethical food, with TV commercials that emphasized those product categories.

Monica LaBarge, a marketing professor at Queen's University, said Loblaw has continued the elder Weston's philosophy of being innovative, but also reflects his son's own perspective.

"It's an interesting evolution of the brand that is probably affected by him, who he is and the age that he is."

Weston was most visibly in the spotlight this year for his quick reaction to the collapse of a factory in Bangladesh that made Joe Fresh clothing.

More than 1,100 people died when the eight-storey building collapsed in April. While one of the factories in the building produced items for Joe Fresh, numerous other clothing makers were also in the complex.

"I'm troubled by the deafening silence from other apparel retailers on this," Weston said at the time, as he promised to take steps to ensure the structural integrity of the factories.

"There are many other retailers involved here and the way that we're going to make lasting change in countries like Bangladesh -- and the industry as a whole -- is to act as an industry," he said.

The company has since moved ahead with short-term financial compensation plans for workers and dependents of the company that produced the Joe Fresh clothing, and has plans for long-term assistance.

Last week, a fund estimated at $40 million was set up by a group of companies that include Loblaw to compensate injured workers and dependents of those of who died. Spanish retailer El Corte Ingles, Bonmarche and Dublin-based Primark also pledged to contribute to the fund.

Hardy called Weston's handling of the building collapse "enormously clever and apparently sincere."

"It just added coherence to the already progressive, green imagine. Now the caring humanitarian was added," he said.

"It strengthens the soft goods line, Joe Fresh, and it takes the edge off the critics."

Nixon said the way Weston put Loblaw front and centre in the wake of the collapse and tried to become part of the solution "speaks very well of Galen as an individual, shows good leadership."

"It's not always easy as a CEO to make those calls, and often you have people telling you not to say things (or) be as out front," said Nixon.

"When I saw that, I was very impressed."


-- The Canadian Press

Republished from the Winnipeg Free Press print edition December 31, 2013 B5


Updated on Tuesday, December 31, 2013 at 6:00 AM CST: Replaces photo

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