George Weston to sell Weston Foods

The company says it intends to focus on retail and real estate, and has made some executive changes at Loblaw.
weston

George Weston intends to get out of the bread business and will pursue a sale for its Weston Foods subsidiary.

In an announcement Tuesday morning, the company said the decision – made following a strategic review by the company’s board of directors – was made in order to focus efforts on its retail business in Loblaw and real estate business in Choice Properties.

Weston Foods is one of Canada’s top bread makers, manufacturing the Wonder, Ace Bakery, Country Harvest, D’Italiano, Casa Mendosa, Dave’s Killer Bread and Gadoua brands, in addition to producing bread and bakery products for private label and foodservice.

The company did not provide an expected timeline for the sale, only saying that it would “commence an orderly sale process shortly” and continue to focus on growing sales and margins in the meantime.

According to George Weston’s full-year results, Weston Foods generated over $2 billion in revenue last year, down by 4% year-over-year, a decrease the company attributed to the impacts of the COVID-19 pandemic. That’s compared to $52.7 billion for Loblaw (up 9.7% year-over-year) and nearly $1.3 billion for Choice Properties (down 1.4%).

But looking forward, today’s announcement said that retail and real estate will be George Weston’s “most significant drivers of long-term value creation” and that there was an “absence of attractive opportunities to increase [Weston Foods'] relative scale within the company.”

Choice Properties is an REIT that owns over 650 properties across Canada, many of which are anchored by one of Loblaw’s retail banners.

As part of the strategic refocus, Galen Weston will return to Loblaw as president, in addition to his duties as George Weston’s executive chairman and CEO. He previously held the role from 2014 to 2017.

Sarah Davis, the current president of Loblaw, will be retiring.

Davis first joined Loblaw in 2007, taking on increasingly prominent roles within the company, including CFO and chief administrative officer. In 2017, she was named president, after Weston left the position to take on CEO and chairman duties at George Weston. The company credited Davis with leading a transformation at Loblaw from a regionally-managed grocer to a national omnichannel retailer, reducing costs by over $1 billion, establishing the company’s data and analytics capabilities and leading the creation of the PC Optimum loyalty program by combining Shoppers Optimum and PC Points.

“In light of George Weston’s strategic decision to focus on retail and real estate… Sarah and I agreed that now is the right time for her to pursue her plans for an early retirement, which she first shared with me upon becoming president in 2017,” Weston said in a press release Tuesday.

The company also hired Robert Sawyer as chief operating officer, with responsibility for its retail divisions, supply chain and procurement. Sawyer has been a Weston board member since 2016, and prior to that, spent three years as CEO at Rona and 34 years working up the ranks at Loblaw competitor Metro.

Rounding out the executive changes, Richard Dufresne, president and CFO of George Weston, will add CFO duties for Loblaw to his remit. He takes over duties from Darren Myers, who is leaving the company after first joining in 2017.

The executive changes will be effective May 6, after the company’s Annual General Meeting.