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Sobeys Inc. has faced operational challenges integrating Safeway Inc.’s Canadian stores. The company has also been losing market share on price competition.Fred Lum/The Globe and Mail

The owner of troubled grocer Sobeys Inc. has named former Canadian Tire Corp chief executive Michael Medline as its new CEO, effective immediately.

Mr. Medline, who worked at Canadian Tire Corp. for more than 15 years in a number of senior leadership roles before he was replaced as CEO last summer by his predecessor, has a big job ahead of him at Empire Co. Ltd.

Its Sobeys business has been mired in difficulties since its $5.8-billion takeover of Safeway Canada in Western Canada in late 2013. Sobeys suffered from a botched integration of the two chains, angering customers with faltering private label and purchasing changes and overly high prices in a market where low-cost rivals were gaining ground.

Last summer Sobeys parted company with its former CEO, Marc Poulin, appointing Francois Vimard as interim CEO. Mr. Vimard had been Empire's chief financial officer previously and now becomes executive vice-president at the company.

Some industry watchers were surprised at the appointment because Mr. Medline has no grocery retailing experience, but also pointed to his extensive experience as a retailing executive.

Mr. Medline "is a talented and well-respected retail executive and in our view, the market is likely to perceive Mr. Medline's appointment favourably given his breadth of experience in Canadian retail," said Irene Nattel, retail analyst at RBC Dominion Securities.

"Nonetheless, investors are likely to remain somewhat cautious in the near term given the magnitude of the challenge at Empire/Sobeys and Mr. Medline's prior focus on hardlines retailing," she said in a note.

"Mr. Medline's extensive experience in large scale, nationwide retail distribution should be a great asset for Empire as the company focuses resources on stabilizing the business," Ms. Nattel said. "However we underscore the challenge of stabilizing a nationwide food retail business against the backdrop of a very competitive food retail environment and ongoing shift of consumer traffic to discount banners."

Sobeys has hired Boston Consulting Group to assess problems and advise on how the country's second-largest grocer can streamline its operations further, cut costs and trim prices to woo back customers. But the efforts had yet to take hold in its most recently reported quarter, when profit was slashed by more than half.

Susan McGibbon, founder of retail consultancy Three Sixty Collective, said she was surprised by the appointment of Mr. Medline as CEO, adding she thought Empire would look for a candidate with a deep background in grocery retailing.

Mr. Medline becomes CEO of both Sobeys and Empire, which is based in Stellarton, N.S.

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