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Australia's Coles Myer Dumps Food, Liquor and Fuel Chief

SYDNEY - While rumors swirl of dissension in the ranks, Australian retailer Coles Myer, Ltd. said yesterday it is firing Steven Cain, head of its food, liquor, and fuel divisions, after little more than a year at the helm of a business accounting for about 80 percent of Coles' earnings, according to published reports.

The company gave no explanation for Cain's abrupt departure. He had been credited with helping boost profits at the company's supermarkets and catch up to Coles' main competitor, Woolworths, Ltd. Until his dismissal, Cain was reportedly being groomed to eventually succeed Coles chief executive John Fletcher.

After Cain was hired in late 2003 from U.K. retailer Asda, Coles began overhauling its supermarket business to include more fresh food and private label products, and made its successful discount gasoline outlets available across Australia. As a result the retailer saw sales grow in its 2004 fourth quarter at the fastest pace in two years.

Cain also made some unpopular decisions, including the merging of redundant functions between the Coles and Bi-Lo supermarket chains, and moving the head office of the Coles Myers' liquor division to Melbourne from Sydney. Both actions led to layoffs.

According to industry sources, Cain alienated senior executives with his radical restructuring of Coles, as well as antagonizing several suppliers with his dictatorial ways.

His departure comes as Coles Myer pursues a program to lower supply chain costs and begins aggressively expanding its own-label products in its stores. The company's aim is to triple total sales from house brands to 30 percent by 2007. Cain was also initiating a revamp of Coles' liquor stores, including plans to sell liquor in supermarkets and a possible expansion into warehouse-style liquor outlets.

Hani Zayadi, managing director of Coles' Kmart department store chain, has been tapped to replace Cain. According to Fletcher, the strategies and structure Cain implemented will remain in place under the new leadership.
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