WHAT IT MEANS AND WHY IT'S IMPORTANT — The news that Shoppers Drug Mart president and CEO Jürgen Schreiber is stepping down has taken investors and many industry observers by surprise; the reality is that the company has been wading through some corporate-level changes in recent years, and the Canadian retail market is facing its fair share of competitive challenges.
(THE NEWS: Shoppers CEO steps down. For the news, click here)
As reported, Schreiber is resigning, effective Feb. 15, to pursue a private equity opportunity outside of North America. He joined the company in September 2006 as president and COO, and was appointed to the position of president and CEO in March 2007.
Following the news of Schreiber's departure, the company's shares fell about 5% to close at C$37.19 on Thursday.
In another somewhat recent executive change, the company announced in January 2009 the departure of George Halatsis, EVP and CFO — a post that was filed by Bradley Lukow, who has been with Shoppers Drug Mart since 1994.
Further raising eyebrows is the fact that Schreiber recently embarked on a three-year strategic plan that promised to result in earnings growth. The concern is that the plan — which, according to reports, involved financial services offerings and a new private-label generic drug initiative — remains in its fledging stage as Schreiber steps down from his post. How the permanent incoming CEO will handle the initiatives is anyone's guess.
Fueling the fire is that many Canadian retail chains have been facing increased competition from U.S. retailers. Not only has Walmart Canada revealed plans to expand its presence in Manitoba and Quebec with some 40 new supercenters, but Target also is making its first foray outside of the U.S. market with plans to enter Canada.
According to reports, Target has agreed to pay Hudson's Bay Co. C$1.83 billion for the leasehold interests in up to 220 sites operated by its discount retailer Zellers. Target will convert 100 to 150 of the locations into Target stores in 2013 and 2014.