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George Weston Limited (TSX: WN) announced that it will soon sell its Weston Foods bakery business and focus on retail and real estate businesses. Despite being one of the leading bakeries in North America, it contributes a small part of the company’s sales.
Galen G. Weston, the Chairman and Chief Executive Officer of the GWL group said that the company will focus on Loblaw (TSX: L) and Choice Properties (TSX: CHP.UN), as it is the right time to further explore the potential of these units as they remain the company's strong pillars and a major source of revenue.
The decision comes in the wake of the company’s inability to find attractive opportunities to further grow the bakery's position within the company. To ensure a smooth transition, the company aims to support its both clients and employees.
Weston Foods’ customer base is spread across North America and it is famous for its fresh breads and rolls. Apart from this, the brand also makes doughnuts, pies, cookies among other bakery products.
Houlihan Lokey and CIBC Capital Markets have been roped in to get advice on the sale process. Meanwhile, the unit will continue to focus on growing sales and improve the margins.
In another development, Loblaw announced that its President Sarah Davis will be retiring. Mr Weston will become the Chairman and President in addition to his present position. The company also announced the name of its Chief Operating Officer and Robert Sawyer will take that position.
Weston Foods’ Financials
The fourth-quarter 2020 results showed signs of recovery, but COVID-19 had an overall negative impact on Weston Foods. In its year-end results, the company declared that its sales were C$ 2,062 million in 2020, down from C$ 2,155 million in 2019.
The operating income was C$ 3 million, down from C$ 72 million year-over-year (YoY). The adjusted EBITDA margin was at 9.7 per cent, down from 10.3 per cent YoY.