PLEASANTON, Calif. — The promotion last week of Robert Edwards to succeed Steve Burd as president of Safeway here is expected to enable Burd to devote more time to non-retail initiatives, analysts told SN.
However, they said they doubt it signals a move by Burd toward retirement from his ongoing roles as chairman and chief executive officer of Safeway — a company he has headed since 1992 — nor any changes in the chain’s strategic direction.
Edwards, 56, has been executive vice president and chief financial officer of Safeway since 1994. He will continue on an interim basis as CFO until a successor is named. As president, he is taking over day-to-day oversight for retail operations, marketing, merchandising, corporate brands, manufacturing, distribution and finance functions.
“Robert is one of those unusual executives with a strong command of both the financial and operational sides of our business,” said Burd (right). “His deep engagement with our operations and marketing units while he has been CFO will make for a seamless transition to Robert’s new role
“His assumption of these duties provides me an opportunity to concentrate more of my time on innovation and a range of strategic initiatives that will drive core- and non-core business growth in the long term.”
The company also said Larree Renda, 53, executive vice president, will take over Edwards’ former responsibilities for overseeing information technology and real estate initiatives, while retaining oversight of human relations, labor relations, strategic initiatives, corporate social responsibility, government relations, public affairs and Safeway Health.
John Heinbockel, managing director for Guggenheim Securities, New York, said, “We do not regard this as the first step in [Burd’s] eventual retirement. He wants to spend more time on interesting strategic issues and trusts Edwards to execute strategic decisions on a day-to-day basis.”
Ajay Jain, an analyst with Cantor Fitzgerald, New York, offered a similar assessment. “While it’s clear Burd is expected to have less direct oversight over Safeway’s retailing operations going forward, he will continue to have a major role in a broad range of strategic initiatives, including Blackhawk [Safeway’s gift-card business] and health and wellness,” he said.
Both analysts said they view Edwards’ promotion as a positive step.
“For many years, both the operational and strategic direction of Safeway was highly concentrated — perhaps too much so — under the leadership of Steve Burd,” Jain noted. “While Safeway is long overdue to make some changes in its senior leadership team, it’s unlikely [this change] will have significant near-term implications from a governance perspective.”
However, he said he is not sure whether the change “will address long-standing questions over succession planning issues based on the unusually long tenure of Burd.”
Heinbockel said the change will enable Burd “to spend more time on the ‘bigger picture,’ both in the core and non-core business, which could well drive greater growth and shareholder value over the longer term.”
He called Edwards’ promotion “the most significant management overhaul [at Safeway] in 20 years,” noting it represents “the first time Burd has named a president and turned over executive-level responsibility for the core food retail business to one individual.”
He said investors should not read too much into the change, “[since] Burd and Edwards seem to be very close and like-minded in their views of the business, suggesting there will be no substantial change in the strategic positioning of the core franchise.
“In addition, given his hands-on approach, we find it hard to believe Burd will not be heavily involved in all major decisions.”
Chuck Cerankosky, managing director of Northcoast Research, Cleveland, said Edwards’ promotion did not come as a surprise. “Robert was selected because of his operations management background, which is what Safeway looks for in the CFO position,” he said.
Under the new organization, Burd will have four executives reporting to him — Edwards; Renda; Bill Tauscher, the CEO of Blackhawk; and Robert Gordon, Safeway’s general counsel — while Edwards will have three — Bruce Everette, executive vice president, retail operations; Diane Dietz, executive vice president, merchandising and marketing; and the new CFO, when he is named.
According to Heinbockel, “This is a reasonably streamlined, efficient organizational structure” that will make it “somewhat easier to get things done day-to-day because having Edwards, who is exceptionally organized, solely focused on [core retail] should improve execution; and giving capable executives more responsibility is simply good for succession planning.”