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Nov 9, 2018

Sobeys CEO vows not to repeat Safeway missteps with Farm Boy: 'We learned our lessons'

Empire CEO on food e-commerce, medical cannabis and minimum wage


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Michael Medline wasn't calling the shots at Sobeys when it bought Safeway's Canadian assets in 2013 for almost $6 billion. But the legacy of that troublesome takeover is sticking with him as he prepares to take control of a beloved Ontario grocery chain.

"[Farm Boy] is such an incredible brand and with such a great customer experience," said Medline, president and chief executive of Sobeys’ parent Empire Company Ltd., in an interview with BNN Bloomberg. "We're not going to mess with that secret sauce."

Empire reached an agreement in September to buy Farm Boy in an $800-million deal that’s expected to close next year. Ottawa-based Farm Boy has 26 stores across Ontario, and Medline said it didn't take long for him to recognize how loyal its customers are.

"I was responding to a tweet from a customer who really was pleading with us not to screw it up," Medline said.

"It was really important to me to make it clear to everyone, 'Don't worry, Farm Boy is Farm Boy. We're not messing with it.’"

Medline took the helm at Sobeys and its parent in early January 2017, tasked with turning around a century-old retailer that stumbled trying to integrate Safeway, taking billions of dollars in writedowns in the process. 

"In the back of my mind, I was wanting to say, 'Look, we learned our lessons from the Safeway acquisition,'" Medline told BNN Bloomberg, in reference to feedback from Farm Boy customers. "You don't want to mess with what's beautiful to customers. In this acquisition we're going to be making sure that everything stays the same or gets better."

Medline's turnaround strategy at Sobeys -- the so-called Project Sunrise, designed to generate $500 million in annual savings by the end of fiscal 2020 -- has been warmly received by investors, who have driven up Empire's stock more than 50 per cent since Medline was appointed CEO.

"I was pleased, the team was pleased," Medline said about the company's most recent quarterly results, which showed 1.3 per cent same-store sales growth in the fiscal first quarter.

"But I know we can do better."