Empire Company LTD (EMP.A) Will Marc Poulin Be Able To Fill Bill McEwan's Shoes As President Of Sobeys ? (Loblaw Companies LTD (L), grocery market competition)

          The February 8, 2012 announcement from Empire Company Limited concerning the retirement of Sobeys CEO Bill McEwan came as no surprise to those already aware of his recent health problems, but that doesn't mean there won't be a difficult transition period. Bill McEwan was instramental in growing the company's business both in its size and market penetration (in just the last two years FreshCo was launched followed by full-service next generation IGA stores in Quebec and Ontario). He oversaw implementation of the company's development growth strategy which thus far has been a success. Sobeys went from being mostly just an Atlantic grocer to one with a Canada-wide reach (881 of its 1337 locations are in Ontario, Quebec and Alberta). It was just after he joined in 2000 that Sobeys parent, Empire Company purchased most of the interest it currenty has in Genstar Development Partnership (real estate, at present Empire owns 40% of Genstar only marginally higher than the 35.7% acquired in January of 2001; Genstar is now a bigger part of the company's real estate business since the divestment of Wajax last year).

Mr. McEwan was also instrumental in getting deals done with Target (will supply the chain with private label food products) and Shell (Sobeys not Empire Company made this deal; acquired 250 of Shell's 1,600 Canadian gas stations. That's in addition to the dozen or so Fast Fuel locations already run by Sobeys Atlantic). In fact even Sobeys private label (Compliments) was launched in the middle of his tenure; The brand now includes a portfolio of five distinct product lines; Balance, Organic, Sensations, Greencare in addition to Compliments, which is vital considering main competitor Loblaw Companies has seen demand for its own Green Leaf organic products surge.

     For a grocery chain that added more than +$200M to operating income, +$6B to sales and pushed parent company Empire's dividends past 80 cents a share, Bill McEwan's generous compensation ($1.9M cash bonus in 2010 in addition to a 3.8% raise) is easy to justify. Only two years prior to making him CEO, Sobeys completed the takover of IGA's parent company the Oshawa Group, in a mega deal that more than doubled sales; That added another dimension to his new job, tasking him with integrating the two companies, does he convert IGA into Sobeys stores or not ? what about Price Choppers? He left the brands intact except for Price Choppers, but that's a different story. Price Chopper locations are gradually being replaced by FreshCo which also markets itself as a discount retailer, meaning they will continue to attract the same type of customers. Sobeys is about half as big as Loblaws (sales) the same as it was back in 2000, but remaining the second largest in what has become an ultra-competitive industry is itself impressive.

His story is remarkable to say the least. He started out bagging groceries at a Ferraro supermarket as a teenager in British Columbia. At around 18, he entered university and began studying Arts before cutting his studies short two years later, opting instead to go back to work at the supermarket. His passion for the food business gave him unique insight as well as put him in contact with the right people and by the 1990's he was a vice-president at A&P in the United States.

Now onto Marc Poilin, who is he ? For starters, he has a masters degree in business (though Bill McEwan did more than alright without one), has 26 years experience in the food retailing business (started out with Provigo - now owned by Loblaws) and 1 year experience as president of a major grocer (IGA).

His job won't be easy; Food price inflation especially for meats (record high and going up) means Sobeys will eventually be forced to raise prices more than customers are accustomed to (2Q2011: Sobeys prices decline -1% even though cost of goods actually went up). Sobeys has not yet raised prices the way it would have liked and that's because of an unprecedented amount of promotional discounting also known as 'disinflation' attributable to intense competition. Not helping the situation is Wal-Mart which now carries more grocery food items than it did a year ago.

Bill McEwan has routinely been awarded top tier industry-level recognition. In 2005 he received the Global Pencil Award. In 2009 supermarketnews named him a top 75 food retailing executive and on April 10, 2012 the Retail Council of Canada gave him the lifetime achievement award (highest award in Canada). The leadership change will become become official on June 29, 2012.

Also of note:

- Empire Company's current president Paul Sobey took over the reigns of the company in 1998, only two years before Bill McEwan joined so it'll be interesting to see if his departure leads to any changes at Empire's board.

- On April 26, 2007 Sobeys and Empire Co officially become one company (Empire) after Sobeys agreed to be bought out for $1.06B (72.1% --> 100%). So until 2006 Sobeys annual report statements were made by itself not part of Empire Company reports.

To those of you who visit my site regularly looking for new posts I apologize for not writing as much lately. I've had a busy couple months and am getting ready to launch a couple new websites. One of them is grocerynews.org (already started but has a lot of work ahead) and the other one I'm working on will be located at techstocks.co (.co not .com). Thanks for visting and appreciate the comments !