Shoppers eliminates 200 jobs

Shoppers Drug Mart Inc., Canada's largest drug store chain, laid off as many as 200 of its head office employees yesterday — about one-fifth of its corporate and regional staff, according to sources.

The Financial Post
October 19, 2001

Shoppers eliminates 200 jobs
Wants to improve balance sheet before going public
Hollie Shaw

Shoppers Drug Mart Inc., Canada's largest drug store chain, laid off as many as 200 of its head office employees yesterday — about one-fifth of its corporate and regional staff, according to sources.

The cuts, the bulk of which reportedly fell in the company's finance and IT departments, come just weeks after the resignation of Shoppers' president Stan Thomas and the layoffs of 14 senior executives.

Arthur Konviser, senior vice-president of corporate affairs at Shoppers, would not confirm the number of employees laid off.

"The purpose of this restructuring is to relocate office resources to better serve our staff and more closely align our resources with the priorities of our business," he said. "We are definitely creating employment opportunities in our stores every day as we open stores and expand others."

The retailer has more than 30,000 employees at 850 franchised Shoppers and Pharmaprix outlets across Canada. About 1,000 employees work at head office in Toronto.

Industry watchers say the company, which installed veteran merchandiser Glenn Murphy as chief executive four months ago, is keen to improve its balance sheet in preparation for its initial public offering of stock.

The retailer is waiting until the market improves before it goes public, say sources close to the company, many of whom said the cuts were long overdue.

"They are cutting out all of the fat," said one executive. "In the end, this is a good thing – they were one of the fattest companies around."

Shoppers centralized its operations in 1995, streamlining its merchandising and purchasing departments and building regional warehouses. Before then, purchase decisions were made by managers at the franchise level.

However, the retailer, which has estimated yearly sales of $5-billion, did not cut staff at the time.

Before Mr. Murphy came to Shoppers, he worked his way up the management ranks at Loblaw Cos. Ltd., where he worked for 14 years. He replaced David Bloom, who retired this summer after 18 years at the helm of the drug store chain.

Shoppers, which has expanded its offerings in recent years to include packaged and refrigerated food products, was bought in early 2000 from Montreal-based conglomerate Imasco Ltd. for $1.78-billion by a group of investors led by New-York-based leveraged buyout specialists Kohlberg Kravis Roberts & Co.

The chain plans to open an additional 200 stores by 2005.

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