Chairman's MessageAs Chairman of the Board, I am pleased to report to you on the Board's perspective of the current state of the Company's affairs.
2014 was a year marked by board renewal and regeneration. Over the past several years, we have witnessed significant changes in our Board as a number of long standing Directors have retired and a number of talented new Directors have been added.
This year we were sorry to lose Annette Verschuren, who retired from the Board in November 2014. Annette brought deep retail experience to the Board and made a significant contribution to our Company during her years of service.
At the same time, we were delighted to welcome Annalisa King and Stewart Glendinning to our Board. Both bring deep business and consumer products knowledge and experience to our deliberations and we are already seeing the benefit of their contributions.
I believe that we have a diverse Board with wide-ranging expertise, solid knowledge of our industry and the markets in which we operate, and a sincere commitment to ensuring that the governance practices at The North West Company are of the highest quality.
At last year's annual general meeting ("AGM"), we received a number of proposals from a single shareholder which were defeated at the meeting. As a Board, we found this experience to be constructive, because it reinforced the fundamental obligation to represent, and listen to the concerns of all shareholders. The North West Company is fortunate to have many long-standing shareholders whom we heard from during the lead up to last year's AGM. We appreciate their support for our work and results but we also recognize that we cannot take that continuing support for granted.
Amongst the shareholder proposals raised at the AGM was a concern about the contribution from our Cost-U-Less operations. We have always believed that our international businesses, including Cost-U-Less, meet the test of leveraging our unique remote market skills and scale. While this year was challenging for our northern Canadian markets, we achieved strong performance within our international segment, led by an improvement at Cost-U-Less. These results helped to soften the impact of more challenging conditions in Canada and reinforced our conviction that our current geographic reach and portfolio of store banners is of continuing benefit to North West.
We also understand that the engine of our Company's continued growth is our northern Canadian market. To this end, we have embarked upon an ambitious store investment program that is heavily weighted to northern Canada and that takes advantage of our physical footprint to better serve the changing requirements of our customers. Stores will be reconfigured to emphasize more of today's local everyday shopping needs and we are refocusing our efforts on manager and employee training - all through our Top 40 Markets and Top Categories initiatives.
The North West Company plays an important role in all of the communities where we do business, but particularly in the north. We and our predecessor companies have been doing business in this area for, in some cases, nearly 350 years.
At times, because of our unique position, we end up in the crossfire on issues that are far more complex than simply providing great products and services at reasonable prices. The continuing debate over the Nutrition North program in northern Canada is a good example of this. North West has worked with full effort and good faith to make this program as effective as it can be in providing more nutritious foods to northern shoppers at better prices. However, the issues driving up costs in the north are much more complicated than can be addressed in any food subsidy program and yet that program, which we think is very effective given its financial limitations, has become the proxy for quite legitimate community concern over the cost of living in the north.
Management continues to work to find better ways to provide a fuller range of products and services to all of the markets we serve, at the best possible local price. It is a related priority to ensure that we continue to find constructive and effective methods to enhance our relationships within all communities in order to help them achieve their ambitions for social and economic development.
As a Board, we remain very optimistic about North West's future and we are most appreciative of the continuing efforts of our management and employees, across all banners, to deliver the best to our customers and superior returns to our shareholders.
- H. Sanford Riley, Chairman, Board of Directors, April 9, 2015