Couche-Tard founder Bouchard to step aside as CEO in favour of American
Tuesday, Mar 18, 2014 03:45 pm
MONTREAL - Alimentation Couche-Tard founder Alain Bouchard, who transformed a small Quebec-based company into one of North America's largest convenience store chains, is turning to a senior member of his management team to guide the firm through the next stage of its growth.
Brian Hannasch, 47, an American who rose through the ranks to become chief operating officer after joining the company in 2001, will take over when Bouchard steps down as president and CEO at the company's annual meeting in September.
Bouchard plans to stay actively involved as executive chairman of the Laval, Que.,-based company, which operates Couche-Tard and Mac's stores in Canada but counts the United States as its largest source of revenue. It has also expanded into northern Europe and has thousands of stores operating under licence in Asia.
"I see this change as an evolution," Bouchard said during a conference call, adding that the board had sanctioned the change in leadership two years ago.
"It will let me invest more of my time in acquisitions and new industry opportunities and, trust me, there are many out there."
The 65-year-old entrepreneur, who last year made Forbes' ranking of billionaires, said his new role will also allow him to serve as mentor and coach to the next generation of company leaders, including his daughter, who joined the company last year and is treasurer.
"I must confess that I have the same sense of excitement about retail that I had when I founded this organization over 34 years ago. I look back upon the journey of those years with a tremendous sense of fulfilment and pride and today I still love what I do."
Unlike Pierre Karl Peladeau who resigned from management at Quebecor to enter politics, Bouchard said he never considered a similar move. Instead, he will continue to work daily at the company but by relinquishing management responsibilities it will allow him to "accelerate the process and find the right (acquisition) opportunities."
Hannasch, meanwhile, said he shares the same core approach as Bouchard.
"Like Alain, I share a very strong belief in the DNA of our company...and I can assure you there will be no sudden change in direction," he said.
Hannasch joined the organization as part of Couche-Tard's first step into U.S. territory when it bought the Bigfoot chain in the Midwest. He has been chief operating officer of the whole company since 2010. He has purchased a residence in Montreal and plans to move there from the United States.
Some shareholders raised concerns at last year's annual meeting when presentations and questions were answered only in English. The unilingual Hannasch said he hopes the company "can get past" those objections as he tries to learn French.
Bouchard downplayed the language issue, noting that English is the language of work outside Quebec.
"We have chosen the best candidate to manage a company that is in 21 countries."
Couche-Tard (TSX:ATD.B), which reports in U.S. currency, said Tuesday that its net profit increased 28 per cent to $182.3 million for the 16 weeks ended Feb. 2, largely due to the acquisition of Scandinavia-based Statoil Fuel & Retail.
Adjusting for one-time items, including a $10.4-million foreign currency gain, a $6.8-million impairment charge for a Poland lubricant plant and a gain from converting pension plans, Couche-Tard earned $175 million in adjusted earnings, up from $153 million a year earlier.
The adjusted diluted earnings were 92 cents per share, one cent short of analyst expectations, according to data compiled by Thomson Reuters.
Revenues decreased 3.3 per cent to $11.1 billion, mainly due to the sale of its European Liquefied Petroleum Gas business in December 2012, currency translation, lower fuel prices in the U.S. and 13 fewer days of operations in the quarter in Europe.
Same-store merchandise revenues were up 3.8 per cent in the U.S. and 2.2 per cent in Canada as the company continued to roll out its enhanced offering of higher margin fresh food.
"I'm satisfied with the results of the third quarter, the outcome of our continuous efforts to improve our in-store offer to our clients and to generate traffic," Bouchard later told analysts during a conference call.
The company has approval for a three-for-one split of its class A multiple voting shares and class B subordinate voting shares, effective April 14. The split shares will trade beginning April 23.
Bouchard said the change is being made following the repeated request of retail investors, who have seen Couche-Tard's share price surge from less than C$20 at the time of the last two-for-one split in March 2005.
On the Toronto Stock Exchange, Couche-Tard's B shares closed up $1.79 or 2.11 per cent at C$86.70 on Tuesday.
"It's an answer to these guys (retail investors). I thought a lower priced share could attract them and invite them to invest more in our stock," Bouchard said.
Irene Nattel of RBC Capital Markets described Couche-Tard's results as "solid" while the stock split signalled management's confidence that the current share price and valuation should be sustainable.
The lack of detailed comments suggest that a large acquisition may not soon be in the cards, she wrote in a report.
Couche-Tard said it remains on track to generate $150 million to $200 million in cost savings by December 2015, despite recording just $64 million annualized before taxes since the acquisition.
The chain is one of North America's largest convenience store operators with 6,221 locations under the Couche-Tard, Mac's and Circle K brands. In Europe, Couche-Tard operates 2,263 Statoil Fuel & Retail stores across Scandinavia, Poland, the Baltics and Russia.
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