The Boss report: 2006 | 2005
Canadian Tire Corp. Ltd. (TSX: CTR.NV)
Date of birth: December 28, 1949
Years at company: 14
Last position: Executive VP, Canadian Tire Retail
Education: Harvard Advanced Management Program
Looking back, it was perhaps too easy to underestimate how Wayne Sales would perform as CEO of Canadian Tire Corp. Chosen in August 2000 from the ranks of the iconic countrywide chain, where he was vice-president of retail, Sales had little profile with analysts and investors. And while he was respected by those who directly worked with him–including outgoing CEO Stephen Bachand–his soft-spoken, quiet demeanor didn't give strong voice to his talents. Combine this with the fact that the fire seemed to be going out on Canadian Tire's revitalization plan at about the same time as Bachand's departure, and it's not difficult to see why the financial community greeted Sales's appointment with muted enthusiasm. “Everyone took a show-me attitude,” says Jennings Capital analyst Cynthia-Rose Martel.
But almost five years later, 55-year-old Sales has managed to convince retail watchers that he has the goods. The company's non-voting stock, now trading at about $60, has quadrupled from a low of about $15 during his tenure thanks to steadily improving results. Analysts who cover Canadian Tire say they now have more certainty about its future. “Canadian Tire has been going from strength to strength,” says David Brodie, retail analyst at Research Capital. He adds Sales has been instrumental in encouraging better disclosure, which makes the financial community more willing to believe his plans for the company.
Indeed, Sales's recent unveiling of Canadian Tire's growth plan for 2005-09–he says it's “designed to enable us to grow from our strengths, and to develop new ones”–was met with confident enthusiasm from the investment community. Rose-Martel recalls that when the retailer's previous five-year strategy was presented to investors in September 2001, she “doubted, as did most of the Street, that the company could execute its plan.” The stock, which by then had inched up to about $22 after his first 12 months, reflected “several years of lacklustre performance.” But under Sales, Canadian Tire came through, she says, with earnings before interest, taxes, depreciation and amortization rising to $710 million in 2004, from $497 million in 2001. The new plan may be similar to the previous one, says Rose-Martel, but “the difference is we are confident that the company can deliver.”
Born in Lynchburg, Virginia, Sales, a former Kmart executive, joined Canadian Tire in 1991. He became its chief executive following an exhaustive international search that led right back home. At the time, the search committee's decision to go with an internal candidate disappointed those looking for a “superstar” CEO to follow Bachand, who was retiring after seven years at the helm. A fellow American with a strong personality, Bachand had developed a bold, capital-intensive strategy for reviving an ailing Canadian Tire. Its main feature was engineering a major retrofit of retail outlets. Bachand ended up becoming the “face” of Canadian Tire to the financial community; those working under him didn't have the same visibility. The result, says Brodie, was that Sales “was underexposed, and with the benefit of hindsight, perhaps underappreciated.”
Canadian Tire's plan under Bachand hit a major snag–a $58-million writedown for the fourth quarter of 1999–that sent shares plummeting. Then Bachand left, cashing in stock options worth $15.5 million and pocketing a retirement bonus worth more than US$7 million. However, Sales, as CEO, stuck to Bachand's basic strategy–he even embellished on its core concept of making stores better through renovation and a stronger assortment. Bachand, now living in Ponte Vedra Beach, Fla., credits Sales for making the plan work. “Once you've got a good strategy out there and have figured out how to take the competition on, it then turns to another phase, which is execution,” says Bachand. “Wayne was always very strong in executing strategy.”
Bachand says Sales is “very much a team player” in his management style, adding “his ego never got in his way.” To that end, Brodie says that at the regular Investor Day seminars the company puts on, the vice-presidents and executives responsible for specific divisions all get a chance to make presentations and develop a profile with analysts and investors. “The face of Canadian Tire now has a lot more facets,” he says. Should its next CEO come from the ranks, there's less chance he or she, like Sales, will be similarly underestimated. Z.O.