Who is John Lederer? He spent 30 years at Loblaw Cos. Ltd., which operates more than a thousand stores in various formats across Canada. Promoted to CEO in 2001, he left in 2006 as part of a management shakeup prompted by poor sales and declining share price. Duane Reade's private equity investor, Robert Bass's Oak Hill Capital Partners, lured him out of retirement to continue Duane Reade's turnaround path -- or spruce it up for sale, a challenge considering it's weighted down by $555.9 million in mostly junk-grade debt.
He follows Richard Dreiling, who came to Duane Reade in 2005 with a similar resume: he ran Longs Drug after a career at West Coast supermarket chains, including Safeway and Vons. Dreiling left late last year to take the CEO spot at Dollar General, another retailer owned by a LBO powerhouse, in this case Kohlberg Kravis Roberts.
Whereas Loblaw operates from sea to shining sea, Duane Reade sold almost $1.7 billion last year in a tiny geography: 242 stores in New York City. As CVS and Walgreens conquer the suburbs, colonize the outer boroughs and make incursions on Manhattan, Duane Reade has struggled to update stores and improve its financials. Margins, operating income, EBITDA and comps for both front end and pharmacy were up last quarter and SG&A was down, but the chain lost more money in 2007 than it did the year before.