LAVAL, Quebec -- With the sudden and unexpected departure of Stephane Gonthier from Alimentation Couche-Tard Inc., the convenience store giant has lost another key rising star, one many had tapped as a possible future CEO, reported The National Post.
Gonthier, 40, was in charge of four divisions in eastern Canada and the United States representing about 2,600 stores, approximately half of the Laval, Quebec-based company's total. He confirmed that he will leave Couche-Tard on June 21, but would not comment on the reasons for his departure or what he will [image-nocss] do next. I'm leaving on very good terms, he told the newspaper.
As reported in CSP Daily News last week, Gonthier's exit from the second-largest c-store chain in North Americawith sales of $11.8 billion (U.S.) in its past four quartersfollows that of Charles Parker a month ago. Parker, who was in charge of the Florida and Gulf Coast stores under Gonthier, left to become CEO of U.S. c-store chain Village Pantry in Indianapolis.
Some analysts noted the two are leaving at a time when Couche-Tard's prospects look less optimistic than they have in the past, said the report, in the face of economic challenges in the United States and sharply higher oil prices.
Oil represents a key source of revenue for Couche-Tard stores. Gas margins and demand tend to remain fairly consistent from year to year, but Tom Kloza, chief oil analyst with Oil Price Information Service, Wall, N.J., told the paper that demand starts to wane when retail prices top $3.25 per gallon, as they have in some markets recently.
Desjardins Securities analyst Jessy Hayem said in a note cited by the Post that management may be quite disappointed by [Gonthier's] departure as high hopes were in place for him within the succession plans.
Analysts expected Gonthier or his counterpart in charge of the western half of the continent, Brian Hannasch, to some day head Couche-Tard after the four men who control and manage the company, including CEO Alain Bouchard, retire, the report said.
But that likely will not happen for another decade, and there are only a few positions ahead of the two heirs apparent, one unnamed analyst told the paper. You have to think it comes down to Stephane looking at the situation, saying, I'm young, I don't know what's next step is for me here, I've done well, but do I want to do exactly the same things for the next 10 years or take what I've learned and become the top guy somewhere else?'.
In addition, as Couche-Tard has gotten larger, it has been challenged to find large enough acquisitions to sustain its expansion pace. The company entered the United States in 2001 and now derives 80% of its revenue from there, making it not only the largest nongrocery retailer based in Canada, but also one of the country's most successful merchants beyond its borders, said the report.
Gonthier, previously Couche-Tard's external legal counsel, quickly rose up the ranks after joining the company in 1998 as general counsel, corporate secretary and head of petroleum operations. He expanded his duties as the firm grew and became senior vice president of eastern North American operations in late 2004.
Meanwhile, now that it has officially sold its U.S. stores to Rite Aid, Longueuil, Quebec-based drug store owner Jean Coutu Group faces some difficult decisions to expand its Canadian presence while maintaining a large equity stake in one of the largest pharmacy chains in the United States, and Couche-Tard has been rumored to possibly be a part of the solution, according to the Canadian Press (CP).
Jean Coutu Group announced on Monday it had closed a $3.9 billion (U.S.) deal to sell 1,854 U.S. Brooks and Eckerd pharmacies and six distribution centers to Rite Aid. The company received $2.36 billion (U.S.) in cash and 250 million shares of Rite Aid common stock.
Some analysts have suggested the time may be ripe for the family to sell its heritage, or at least take it private. "I think they should exit the business, somehow, some way," one industry observer who did not want to be identified, told CP. The reality of the Canadian market is there aren't many opportunities to grow in a meaningful way beyond the Quebec border, he said. "That leaves the business in a conundrum as to what's acceptable growth for the Canadian operations as a public entity and that opens Pandora's Box."
Industry observers have suggested that the company may team up with Couche-Tard or grocery giant Metro Inc. or even with Rite Aid to import the drug store banner to Canada.
Francois Coutu said the company's board has not made any decision about these matters, but the family has no desire to sell or take the company private.
Jean Coutu dominates the Quebec drug store market, whose 301 stores hold an estimated 43% of market share. The company has recently renovated several stores to maintain its leadership position. "We'll keep in going the same pace and it will probably be accelerated now that we have a new focus on the Canadian operations," Francois Coutu told CP.
As to expansion, Coutu said the companyis abuyer and will look for opportunities in Canada. "It is a large country with good markets everywhere. We understand this will be a new venture for us, but we'll make the right analysis to make sure there's going to be an opportunity for us in the rest of Canada."
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