The president of Loblaw Companies Inc. has left the grocery giant "by mutual agreement" as part of a major management shakeup, the company announced Wednesday.

John Lederer is being replaced by Mark Foote, who was hired away from Canadian Tire Corp. in April.

Loblaw three-month trading

"John Lederer has stepped down from the position of president by mutual agreement and resigned as a director of the company," a statement from Loblaw said.

The company also announced that Galen G. Weston, son of W. Galen Weston, will succeed his father as executive chairman of Loblaw Companies Ltd.

"The board and the Weston family, as the controlling shareholder, have been considering the company's future leadership structure and succession for some time," said W. Galen Weston, in a news release.

"With John's stepping down, this is the appropriate point at which to implement a number of those considerations as we manage and prepare for the company's future," he said.

The shakeup comes as Loblaw's share price languishes not far off its five-year low. The stock has lost a third of its value since April 2005.

Loblaw began restructuring its supply chain in early 2005 and was still feeling the financial impact of that a year later.

In January 2006, it warned investors its earnings for the fourth quarter would fall well below the previous year's levels because of restructuring charges.

Last month, the Dominion Bond Rating Service downgraded Loblaw debt, citing weakening earnings and increasing competition in the grocery business.  

Brokerage firm Merrill Lynch downgraded Loblaw shares to "sell," citing the management shakeup. It lauded Lederer and said the company needs his talent.

"We know of few executives of his calibre in the retail industry globally and just as he has left a mark on the organization, we are concerned that this departure will have left a meaningful void in the executive ranks at Loblaw at a time when we think the company can ill afford it," a Merrill Lynch note to clients said.