Royal Bank said it sacked Nadine Ahn and the other employee, whom it didn’t name, after an internal review and an investigation by outside legal counsel
The sudden exit of Royal Bank of Canada’s chief financial officer comes at a “critical juncture” for the lender as it tries to absorb the biggest acquisition in its history, a leading Wall Street analyst says.
Canada’s largest bank fired CFO Nadine Ahn on Friday, saying she’d violated its code of conduct by having an undisclosed “close personal relationship” with a colleague who was given preferential treatment, including promotion and pay increases.
“Given the importance of the CFO role in managing operational efficiency, we believe that there will be an even greater investor focus on the HSBC integration and improvements in City National’s operations,” Aiken said in a note to clients published Sunday.
“We maintain that the following several months are a critical juncture for the bank and the loss of a key senior executive team member at this time is a material loss, regardless of the pedigree of her successor.”
Other market watchers said the departure may dent Royal Bank’s reputation but is unlikely to drag the lender down in a major way. The shares closed up 0.6% on Monday at C$139.95 in Toronto, better than the 0.3% gain for the S&P/TSX Composite Commercial Banks index.
“It sounds like a messy departure and certainly not something that investors would be happy about — abruptly losing your CFO is never a good thing,” said Mike Rizvanovic, an analyst with Keefe Bruyette & Woods, noting that he was surprised by the level of detail the bank shared in its press release about the reasons for Ahn’s departure.
There shouldn’t be any major disruption in the bank’s day-to-day operations, but employee morale could be damaged, he said, adding that Ahn was respected as a woman in finance in a very senior role. She was named CFO in 2021.
“I do think it’s a bit of a hit to Royal’s reputation in terms of the management team,” said Rizvanovic, who has an outperform rating on the bank’s shares. “But it’s not like my view on Royal has changed significantly.”
Katherine Gibson is filling in as CFO on an interim basis, and there are numerous internal candidates who could succeed Ahn, Rohinton said.
While CFOs are sometimes considered to be candidates to become chief executive officer, Rohinton said he “didn’t have a strong view” on whether Ahn was in the race to replace current CEO Dave McKay.
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
Companies in this story: (TSX:ROOT)
The Canadian Press. All rights reserved.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
The Canadian Press. All rights reserved.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Companies in this story: (TSX:TRZ)
The Canadian Press. All rights reserved.
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