Calvin McDonald, president and CEO of Sears Canada Inc (TSE:SCC) (OTCMKTS:SEARF) resigned from his position to pursue a new job in an international company. McDonald decided to leave after two years in leading the turnaround efforts of the department store chain.
McDonald’s contributions for Sears Canada
Sears Canada Inc (TSE:SCC) (OTCMKTS:SEARF) hired McDonald from Loblaw Companies Limited (TSE:L) (OTCMKTS:LBLCF) in 2011. He implemented a three-year transformational plan for the struggling department store chain to regain its customer base. He changed the pricing strategy and renovated the store of the company to achieve its goal.
The following is our rough coverage of the 2021 Sohn Investment Conference, which is being held virtually and features Brad Gerstner, Bill Gurley, Octahedron's Ram Parameswaran, Glenernie's Andrew Nunneley, and Lux's Josh Wolfe. Q1 2021 hedge fund letters, conferences and more Keep checking back as we will be updating this post as the conference goes Read More
During the second quarter, Sears Canada Inc (TSE:SCC) (OTCMKTS:SEARF) reported another decline in quarterly revenue. The department store chain posted $960.1 million revenue, down by 9.6 percent from its $1.061 billion revenue in the same period a year earlier. Its net earnings improved from a net loss of $9.8 million or $0.10 per share to $152.8 million or $1.50 per share.
McDonald unsatisfied with improvements
In January, McDonald told Reuters that he was not satisfied with the improvements of Sears Canada Inc (TSE:SCC) (OTCMKTS:SEARF) over the past 19 months since he assumed his position in leading the company.
In a note to investors, Keith Howlett, retail analyst at Desjardinis Securities opined that McDonald’s departure reduces the potential operating turnaround of the department store chain. He said, “Our view was that McDonald was a talented, energetic retail executive and might have been able to accomplish a turnaround against what we perceive as long odds.”
Howlett added, “The parting appears to be on amicable terms, and the company indicates that it is the result of a personal career decision by McDonald. Our speculation is that McDonald may have held differing views from those of the controlling shareholder, Sears Holdings on the appropriate level of capital spending for store renovations, on the sale of under-market leases back to landlords (Yorkdale, Mississauga Square One and others) and with respect to the outsourcing of head office positions to other countries.”
CEO of Luxottica Group On McDonald’s resignation
On the other hand, retail expert and CEO of Luxottica Group SpA (ADR) (NYSE:LUX) (BIT:LUX), Greater China opined the McDonald resigned amid the critical point for Sears Canada Inc (TSE:SCC) (OTCMKTS:SEARF). According to him, “If they veer off from their current path of cleaning up their product lines and developing new ones, they will lose what momentum they have begun to establish in sales.”
Sears Canada Inc (TSE:SCC) (OTCMKTS:SEARF) appointed Douglas Campbell as president and CEO to succeed McDonald effective immediately. Campbell previously served as executive vice president and chief operating officer of the department store chain.
In a statement, William Crowley, chairman of Sears Canada Inc (TSE:SCC) (OTCMKTS:SEARF) said, “Doug’s disciplined approach has been instrumental in managing costs and driving efficiencies. We look forward to his leadership as we continue to improve profitability across the business.”