North West Co. Fund
Annual Report 2011

Plain-text annual report

Delivering on our promise The North West Company Inc. 2011 Summary Annual Report Committed to More Growth in Store Two years ago, The North West Company embarked on a long-term strategy to generate More Growth in Store, a focus built on the simple goal of becoming a retailer who consistently delivers higher-standards for the benefit of all of our stakeholders, beginning with our customers. Today, we’re delivering on that promise by diligently working to improve processes and capabilities across our enterprise. Vision & Mission Store network Banners Investment strength 2011 financial highlights President & CEO message 25th Anniversary Product optimization In-stock performance Store stability Supply chain Our community promise Chairman’s message Board members Executive information 1 2 3 4 5 6 9 11 12 14 18 20 22 23 24 True to our purpose The North West Company is a leading retailer of food and other essential everyday products and services to remote communities and urban neighbourhoods across Canada, Alaska, the South Pacific and the Caribbean. Our commitment to remaining foremost in these markets is reflected in our vision and mission. vision To create the ability and desire for customers to shop locally with us for the widest possible range of products and services that meet their needs. mission To be a trusted community store of choice. The North West Company Inc. 2011 Summary Annual Report 1 Reaching “hard-to-reach” customers We serve some of the most geographically-diverse communities in the world, from the Arctic to the South Pacific. Northern 123 Stores NorthMart 7 Stores Quickstop 15 Stores Giant Tiger 36 Stores AC Value Center 30 Stores Cost-U-Less 12 Stores Other Formats1 6 Stores $49 Other $178 AC Value Center South Pacific Ocean $257 Cost-U-Less $595 Northern $304 Giant Tiger $112 NorthMart 2 The North West Company Inc. 2011 Summary Annual Report Our urban, rural and remote markets span the Northwest Territories, Nunavut and Alaska, across Canada’s western and central provinces, down to Hawaii, Fiji, Guam, American Samoa and 8,500 miles east into the Caribbean Islands. 2011 Sales by Banner ($ in millions) 1 Includes Valu Lots, Solo Market, Fur Marketing, NorthMart Pharmacy and Island Fresh Our Banners In addition to fresh food, quality groceries and everyday merchandise, many communities depend on The North West Company for vital services. Many of our stores provide far more than day-to-day essentials. Customers also rely on us for necessities like banking, petroleum, postal outlets, tax returns, even mobile phones and airtime. We are truly one-stop-shops in many corners of the world. northern stores, offering a combination of food, financial services and general merchandise to remote northern Canadian communities. northmart stores targeted at larger northern markets with an emphasis on an expanded selection of fresh foods, fashion and health products in western Canada. quickstop convenience stores offering ready- to-eat foods, petroleum products and related services. giant tiger junior discount stores, offering family fashion, household products and food to urban neighbourhoods and larger rural centres in western Canada. “I like the fact that NorthMart has ATMs in the store which I rely upon from time to time, as well as financial services. I also like the fact that NorthMart has an in-house pharmacy that I trust.” Brenda Beacham, Cross Lake NorthMart customer ac value center stores similar to Northern and NorthMart, offering a combination of food and general merchandise to communities across remote and rural regions of Alaska. cost-u-less mid-sized warehouse stores, offering discount food and general merchandise products to island communities in the South Pacific and the Caribbean. island fresh neighbourhood store offering convenience with an emphasis on fresh and prepared foods. $1.495 Billion in sales 229 Locations 6,901 Employees The North West Company Inc. 2011 Summary Annual Report 3 A solid investment 85%+ community stores 90%+ customer frequency 87% earnings stability Community stores with big-box urban retailers two hours or more away from 85% of our remote banner* stores, we are the true definition of close and convenient. Over 90% of households served by our remote banners* shop with us every month, giving credibility to our unique community store role. 87% of our sales are food and everyday products and services, which lessens our susceptibility to economic volatility and fluctuations in discretionary spending. 6.0% EBITDA CAGR 21% value creation 1.5x population growth With strong cash flows and prudent debt, we continue to invest for growth while returning about 50% of cash flow to investors every year. Trading profit (EBITDA) increased from $70.5 million to $125.9 million over 10 years ending January 31, 2012—a compound annual growth rate of 6.0%. Total returns to shareholders have been 21% on a compound annual basis over the past 10 years, reflecting the Company’s focus on growth and yield. $10,000 invested at January 31, 2002 was worth $67,119 at January 31, 2012. Our remote markets are young with income growth from resource development and stability from government funding. Population growth is 1.5 times that of Canadian and U.S. averages. Twenty-five year sales history April 4, 1987 – January 31, 2012 ($ in millions) International Operations Canadian Operations 1500 1000 500 0 * includes Northern, NorthMart, AC Value Center and Cost-U-Less which collectively represent 76% of total sales 1987 1992 1997 2002 2007 2011 4 The North West Company Inc. 2011 Summary Annual Report 2011 Financial highlights CGAAP 1 All currency figures in this report are in Canadian dollars, unless otherwise noted ($ in thousands, except per share information) Year Ended January 31, 2012 Year Ended1 January 31, 2011 Year Ended January 31, 2010 RESuLTS FOR ThE YEAR Sales Same store sales % increase 2 Trading profit 3 (EBITDA) Earnings from operations 3 (EBIT) Net earnings Cash flow from operating activities FINANCIAL POSITION Total assets Total debt Total equity FINANCIAL RATIOS Debt-to-equity Return on net assets 3 Return on average equity 3 Sales blend: Food General Merchandise Other PER S hARE ($) ¬ DILuTED 4 Trading profit 3 (EBITDA) Net earnings Cash flow from operating activities Market price : January 31 high low Sales1 ($ in millions) 1,444 1,448 1,495 1,393 1,064 1,500 1,250 1,000 750 500 250 0 $ 1,495,136 3.3% $ 125,881 89,309 57,961 114,658 $ 1,448,104 2.7% $ 125,764 90,272 69,656 114,564 $ 1,444,366 0.1% $ 130,274 95,124 81,813 107,973 $ 626,917 175,892 283,709 $ 616,588 192,596 286,475 $ 623,800 209,170 289,926 .62:1 18.5% 20.1% 76.4% 20.2% 3.4% 2.59 1.19 2.36 19.40 22.50 17.85 $ .67:1 17.9% 24.1% 76.4% 20.3% 3.3% 2.59 1.44 2.36 21.09 23.00 17.02 $ .72:1 18.7% 29.3% 77.2% 19.8% 3.0% 2.69 1.69 2.23 17.94 19.60 14.88 $ Trading Profit 1 ($ in millions) Cash Dividends/Distribution Per Share/Unit ¬ Diluted ($) 130 122 126 126 107 150 125 100 75 50 25 0 1.42 1.40 1.39 1.13 1.05 1.50 1.25 1.00 0.75 0.50 0.25 0.00 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 1 The January 31, 2011 comparative figures previously reported in accordance with Canadian generally accepted accounting principles (CGAAP) have been restated to conform with International Financial Reporting Standards (IFRS). An explanation of the transition from CGAAP to IFRS is provided in Note 24 to the January 31, 2012 consolidated financial statements. The financial information for the fiscal years 2007 to 2009 was prepared in accordance with Canadian GAAP and has not been restated. 2 Same store sales, excluding the foreign exchange impact. 3 See Non-GAAP financial measures section on page 26 of the Annual Financial Report. 4 Effective January 1, 2011, North West Company Fund converted to a share corporation called the North West Company Inc. The comparative information refers to the units of the Fund. See conversion to a share corporation on page 7 of The Annual Financial Report. The North West Company Inc. 2011 Summary Annual Report 5 President & CEO message We continue to engage with our customers, on a daily basis, to strengthen our position as their trusted community store of choice “Delivering on our Promise” sums up our 2011 focus on becoming a tighter, leaner and higher-standards retailer, ultimately leading to More Growth in Store for tomorrow and beyond. This is our third year on this promising path and I’m pleased to report that we are producing results that demonstrate we’re doing what is right for our customers first and our business overall. As would be expected after a second year of flat bottom line performance, I am asked why I remain so positive about our achievements. The answer starts with the core business of selling food, which accounts for 76% of our current revenue base and continues to grow. In 2011, North West’s same-store food sales rose 3.5% and same- store food gross profit dollars increased 6%. Like last year, these results place us ahead of most food retailers in North America. major gains This outcome is directly due to our disciplined focus on becoming a more consistent food merchant. We have delivered on foundation work like the major gains we’ve made in our food in-stock rates, which improved 580 basis points across our northern banners throughout the year. Likewise, our fresh food profitability and market share increased, led by a 20% rise since 2009, in produce gross profit dollars in Northern Canada and Alaska. In addition, we exceeded targets in two other important building-block areas: outbound logistics costs and store stability. Outbound logistics encompasses the time, skill and cost to move products and services to our customers wherever they live, which in our case means some of the world’s most remote areas. This requires complex, high-expense work which at the same time pose vast opportunities for improvement. 6 The North West Company Inc. 2011 Summary Annual Report moving ahead By consolidating our air freight and renegotiating rates with our key Canadian air carriers, we were able to lower food prices in 2011, and these efforts were complemented by a key change in the federal government’s nutritious food subsidy program. Behind the scenes, we completed a full assessment of our outbound network and mapped our vision for a technology-enabled transformation of how we will plan, move and track products in real time. This work culminated in selecting a Transportation Management System and laying the foundation for integration and roll out in 2013. We advanced our store stability progress in three important ways. First, we recruited a record number of new store and department manager candidates, setting the stage for an influx of recently-trained, highly-capable leaders assigned to stabilize 25 below-potential stores in 2012. Second, we created clear, relevant success profiles so that we now have practical, tailored criteria for recruiting, retaining and developing qualified managers. Third, we addressed an area of high priority for manager retention by investing $7 million in staff housing upgrades to be followed by an additional $5.0 million in 2012. growth strides Our complementary businesses also hit new strides in 2011. Most notably: • the recovery of our Alaskan wholesale business • growth in our pharmacy division, including hospital contract services and a partnership agreement for future health services with Manitoba Keewatinowi Okimakanak, a regional northern Manitoba tribal council • the debut of our first three Tim Hortons locations in Iqaluit, Nunavut • the addition of a second direct-to-customer food distribution outlet located in Edmonton • a record-setting year for volumes and revenues in our eastern Arctic shipping venture Amidst this important activity, we confronted external hurdles, including fires destroying three of our Northern stores in the past 12 months and a persistently sluggish economy. Each challenge is being effectively managed The North West Company Inc. 2011 Summary Annual Report 7 The next 25 years of success To mark The North West Company’s 25th Anniversary as an independent enterprise, we kicked off 2012 with our annual Wintering Partners’ Conference in February, but for this special occasion we brought all of our store managers together for the first time ever. 220 managers from the Caribbean, South Pacific, Alaska and Northern and Western Canada converged in Winnipeg for a week of learning and sharing better practices, later described as the “best ever” for getting dialed into our 2012 sales plans and improvement agenda. To cap off the week, conference attendees joined another 900 employees, retirees and friends of the Company for an anniversary dinner and gala in Winnipeg, where recording artist Susan Aglukark performed along with First Nations’ dancers and a steel-drum band. Demonstrating the career commitment that has built North West, 171 staff were also honoured for 25-52 years of tenure. “This celebration was a tribute to the past 25 years of success as an independent company and the over 340 preceding years of continuous service to the people of the North and today many other parts of the world. I assure you that the spirit and pride of the people here, together with our nearly 7,000 fellow Nor’Westers at work everyday in our stores making customer service their first priority, bodes well for our future” said Edward Kennedy, President & CEO. The North West Company Inc. 2011 Summary Annual Report 9 “Our customers love our fresh fruit and vegetables. We always have a good selection in store and offer a lot of variety on a regular basis.” Thoma Irkootee Produce Manager, Northern, Rankin Inlet, Nu 10 The North West Company Inc. 2011 Summary Annual Report “In our business, you’re either in stock or you’re out a customer sale The main focus in our store is to be consistently in stock on everyday items customers want at all times You cannot grow your business otherwise. On a consistent basis, customers will make your store the first place to shop and when you gain customer trust that you have what they need, everybody wins.” Mike McNally Branch Manager, AC Value Center, Nome, AK The North West Company Inc. 2011 Summary Annual Report 13 Staffing for stability Store Stability’s goal is to drive store execution capability through stable and proficient store teams supported by lean retail processes. We are building the foundations to ensure we recruit managers with the right skills and attitudes needed to excel in remote locations. We are providing an attractive value offer aimed at motivating and rewarding employees to remain and grow with us. The North West Company is committed to building the most capable, stable store teams in the markets we serve and to be a trusted community store of choice. Richard Fortier, Vice-President, Human Resources In 2011, we pursued several initiatives to achieve long-term stability, including reviewing our recruitment criteria, increasing management bench strength and working diligently at strategic employee placements to retain team cohesion and ensure time for staff to gain thorough insight into local markets and customer needs, while forging strong community bonds for sustained success. Building on our 2010 progress, we continued to re-structure stores and add both Administration and Grocery Fresh Managers to create breadth across our teams and free up Store Manager time to grow the business and strengthen customer and community relations. store manager success Simultaneously, we developed a Manager Success Profile to pinpoint competencies and character traits, based on key performance indicators specific to our business. This will assist in recruiting highly-capable leaders and provide a solid platform for honing existing skills. We also reviewed employee housing standards, which is a key, controllable retention factor, and developed a comprehensive plan with dedicated resources to ensure sustainable, quality housing across the North. With these initiatives the past 12 months, we are well on our way to store stability across our operations. While regional business models differ, many of our strategies can be effectively applied throughout our banners for lasting stability and superior execution capabilities. 14 The North West Company Inc. 2011 Summary Annual Report “Customer service is where the job begins, it’s what drives the business. I like having the ability to provide a service to the community, while building friendships with our customers.” Salu Bodine Department Manager, AC Value Center, Nome, AK The North West Company Inc. 2011 Summary Annual Report 15 Creating tomorrow’s leaders Today more than ever this program is proof that our core principles are embedded in every corporate facet of our business, each employee action and all customer touchpoints. leadership@north west By January 31, 2012, over 50 North West senior managers have completed training and attended working trips to various stores to gain in-depth insight into local markets, cultural differences, customer needs and what it means to live and work in that community. Bi-annual forums are also part of the program, enabling leaders to gather to discuss common platforms and new practices. Added last year was an inaugural Ideas Summit where our Canadian and International senior leaders met to share process, systems, enterprising ideas, and experiences gleaned from store working trips, and learn about unique challenges and opportunities in each of our markets and banners. managing@north west In the third year of this practical, blended learning program an additional 200 managers were trained to manage everyday scenarios and challenges, as well as apply new business tools and processes to improve market-specific strategies and results. Originally designed for support office managers, a condensed version of Leadership @ North West was launched as Managing @ North West and rolled out in 2009. In 2011 the program reached over 200 managers in warehouse, operations, technical and store support functions across our operations. In 2012 Managing @ North West graduates will be able to take advantage of further training through peer-to-peer mentoring, Manager Forums and lunch and learns. In 2012, we plan to cascade a refined Managing @North West program to an additional 225 supervisory and entry-level employees across the organization. 16 The North West Company Inc. 2011 Summary Annual Report Craig Gilpin, Executive Vice-President & Chief Corporate Officer Ideas Summit, January 2011 “NWC does a great job of training managers and helping us grow. The leadership program covers everything from Managing Change to Motivating Employees to Superior Customer Service. We learn to apply our core principles consistently, whether in Northern Canada or the South Pacific.” Guy Strickland (left) Store Manager, Cost-u-Less, Grand Cayman The North West Company Inc. 2011 Summary Annual Report 17 Superior connections Outside experts say that North West operates the most complex supply chain they’ve ever seen, not only due to distance and destinations, but also the multiple modes of transport—road, ice road, rail, air, water—plus local handling that can add up to a half dozen hand-off points for some stores. For us, that says opportunity for improvement. Mike Sorobey, Vice-President Logistics & Supply Chain Services The logistics of our vast distribution network pose challenges to even the brightest scholars. An online supplement to the Harvard Business Review publishes case studies of North West Supply Chain Management for academic analysis. Year two of our logistics strategy to contribute to more growth in store required the vision and framework for proprietary and integrated transportation services. The cornerstone is our Transporation Management System (TMS). This robust platform will help redefine our outbound transportation capabilities in the north, optimizing load efficiencies by location, delivery windows, volumes and carrier types, while yielding invaluable real-time item visibility across our supply chain. Longer term it will also generate freight delivery capabilities that can be leveraged to bring a vast assortment of products to our customers, far beyond the current physical and cost limitations of local store selling space. TMS deployment is slated for 2013, with pilot testing beginning in the second half of 2012. We have high expectations for the resulting efficiencies of these advanced core processes on our $100 million annual expenditures on outbound logistics and our ability to fully live up to the North West’s reputation of being the best at moving retail products and services to some of the hardest-to-reach customers in the world. new subsidy savings Much of our attention at the start of 2011 was to develop and implement proccesses to support the Canadian government’s new Nutrition North program which replaced Food Mail. As of April 1st, 2011, rather than subsidizing transport costs to ship groceries to hard-to- reach northern communities, subsidies are paid directly to retailers like North West who serve the Canadian north, enabling us to work with our carriers to determine more efficient routing, better service and lower freight rates. 18 The North West Company Inc. 2011 Summary Annual Report The North West Company Inc. 2011 Summary Annual Report 19 Our community promise This has tremendous positive impact and goes hand in hand with being a trusted local retailer. While our contributions are varied, financial support is divided between five general categories: culture & arts $705,422 North West supports cultural events, performing arts and celebrations of heritage, language and artistic expression, including The Manitoba Theatre for Young People’s Aboriginal Arts Training and Mentorship Program and the Festival du Voyageur. sports & recreation 7,000+ We help over 7,000 youth annually by providing uniforms, team travel, financial aid and sponsoring summer camps, community-based street hockey and more. youth & education $282,169 healthy living $443,408 environment 1,082 mt Each year we award thousands of dollars in post-secondary scholarships and educational assistance to our community members, schools, and staff, including programs like Excellence in Aboriginal Business Leadership and Junior Achievement. Our Healthy Living Programs promote nutritional and physical wellness for our customers and employees. North West also participates in events for the Canadian and American Diabetes Associations, the Canadian Cancer Society, the Muscular Dystrophy Association and others. Streamlining our truck fleet decreased fuel consumption and cut Greenhouse Gas Emissions by 1,082 metric tons in 2011. As well, our Greener Tomorrow program has helped reduce plastic bag use by more than 60% across the Northwest Territories, Nunavut and Nunavik. Our everyday participation is counted on more than that of average outside businesses and we do our best to live up to these expectations. In addition to supporting causes and events financially, and recruiting, training and employing community members where we work, North West donates thousands of volunteer hours annually. employee giving Staff participation goes into every initiative we support. From our front-line customer service associates through to our President & CEO, the example is set by hundreds of Nor’Westers every year in many ways, including our United Way leadership last year and going the extra mile for the Canadian and American Diabetes Association (see sidebar). Here’s a sampling of who and how we’ve helped in the past twelve months1: • Drop the Pop annual campaign in Nunavut, Northwest Territories & Yukon • Cost-U-Less St. Croix helps VICARE promote HIV screening and awareness • Giant Tiger raises $90,000 for sick children across Western Canada • Northern Lac Brochet donates $15,000 to bring Keepers of the Water youth summit in Northern Saskatchewan • NorthMart Iqaluit donates $10,000 to aid victims of flash fires • Cost-U-Less and Island Fresh raise vital donations for Guam Memorial Hospital • Northern Attawapiskat provides gift cards to 300 residents at Christmas 20 The North West Company Inc. 2011 Summary Annual Report united way & days of caring Our people have greatly increased both financial aid and volunteer support to the United Way through the years. We have turned the charity’s annual Day of Caring into a multi-day company affair, taking on projects for lasting impact. In 2010, we spent five days plowing and planting a garden in a low-income Winnipeg community. In 2011, we visited a similar housing complex where 150 North West employees, from executives to store cashiers, hauled lumber, soil, mulch and dug in to create two vegetable gardens for the enjoyment of the whole community. rome run for diabetes 61 North West employees from all banners and 16 community members converged in Rome, Italy last spring for a marathon benefitting the Canadian and American Diabetes Associations. Over the past 10 years, staff from coast to coast have united as Team Diabetes, raising well over $2 million. Joining President and CEO, Edward Kennedy and the team was Grand Chief, David Harper of Manitoba Keewatinowi Okimakanak, running on behalf of Aboriginal people who are up to five times more likely to develop Type 2 diabetes. While past proceeds funded research, net proceeds raised by Team Diabetes in 2011 – over $250,000 – will be directed to diabetes education and programs within the communities North West serves. Our dedicated staff also run and fundraise annually in Labrador’s Trapline Marathon and the Long Sun Run in Northern Saskatchewan. social connections Our Northern/NorthMart Facebook Community page launched last summer, garnering about 7,800 views per posting and 4,300 weekly users. Through conversations, contests, promotions and product profiles, we are gaining insight into lifestyle trends we can leverage to better meet our customers’ local shopping needs. We created Facebook pages for many more of our communities as an excellent localized forum. Follow us on Facebook, Twitter, LinkedIn and YouTube. Resident children, Casa Manita Orphange Cost-U-Less Curacao management and staff provide ongoing mentoring and nurturing for deserving children. • North West bestows National Aboriginal Achievement Foundation Bursary in Business and Commerce • American Samoa Cost-U-Less and Red Cross help tsunami victims • Northern Ile a la Crosse raises $5,000 to help build a new community swimming pool complex • North West delivers Christmas gifts to 200 children and low-income families in Winnipeg • North West provides We Day with a $10,000 sponsorship 1 For a detailed listing, please view Our Community Promise report at www.northwest.ca and our annual highlights at www.northwest.ca/community The North West Company Inc. 2011 Summary Annual Report 21 2011 Chairman’s Message 2011 was a year of measurable progress at North West. The Company continued to focus on driving sustainable results through operational excellence or “More Growth in Store “ and our northern businesses led the way, helped by relatively stable economic and competitive environments. The ability to apply new approaches to the business was a testimony to the energy, openness and dedication of our associates. Their strength continues to be a hallmark to our success. As the Company’s attention to process innovation and execution increased, your Board played an active oversight role in helping ensure that performance targets were appropriate and that compensation was aligned. Over the past year, this produced changes to both short and long-term incentive pay. On the short-term side, several performance drivers were identified by management as key to accomplishing the initiatives highlighted in this summary report. These have been added to the previous single, bottom line business unit measures and will be part of the Board’s ongoing review of our “More Growth in Store” effectiveness. The delivery of total returns (share price growth and strong dividends) is a key long-term objective of the Company just as it has been a key feature of our performance over the past 25 years. Going forward, long- term incentive pay has been adjusted to recognize both consistent achievement against operational and strategic targets and our total returns compared to other public Canadian and U.S. retailers. An important development at the Board level was the transition of our Board make-up. As announced last year, Ian Sutherland, a founding shareholder, former CEO and former Chair, retired at the 2011 Annual Meeting. Just prior to Ian’s departure, Keith Martell, a leading Aboriginal business person, left the Board due to his primary business commitments. At the 2012 Annual Meeting, Jim Oborne and David Broadhurst will be retiring from the Board. Jim and David have made long, valuable contributions to North West dating back to the Company’s start-up as an independent business in 1987 with Jim, in particular, playing a pivotal role as the lead Winnipeg director and in the initial financing of the enterprise. directors. Gary Merasty, Vice-President, Corporate Social Responsibility at Cameco Corporation, joined the Board in June 2011 and brings a deep understanding of constructive Aboriginal community relations in the North built on a career as a teacher, business leader and federal politician. Annette Verschuren, Executive Chair, NRStor Incorporated and formerly President, Home Depot Canada and Asia for 15 years, was appointed in December 2011 adding a unique blend of entrepreneurial and international retail perspectives. Eric Stefanson was appointed in January 2012 and has great breadth in senior finance and accounting roles, including his most recent position as Central Canada Managing Partner, BDO Canada and earlier experience as CFO of Assante Canada and Minister of Finance of Manitoba from 1993-99. In this, our 25th year as an independent company, these changes leave North West well-positioned with a balanced set of skills and a Board renewed and ready to fulfill the tradition of strong governance first established in 1987. While we appreciate the important contribution of all of these retiring directors, I am very pleased to report that your Board has moved forward diligently on board succession with the recruitment of three strong, new h. Sanford Riley Chairman, Board of Directors April 9, 2012 22 The North West Company Inc. 2011 Summary Annual Report Corporate Governance Board of Directors 1 4 7 2 5 8 FPO new images FrOm client 3 6 69 10 11 directors the north west company inc. 1 h. Sanford Riley Chairman 2 Edward S. Kennedy 3 David G. Broadhurst 1,2 4 Frank J. Coleman 1,2 5 Wendy F. Evans 1,3 6 Robert J. Kennedy 2,3 7 Gary J. Lukassen 2 8 Gary Merasty 2,3 9 James G. Oborne 1,3 10 Eric L. Stefanson 2,3 11 Annette M. Verschuren 2,3 committees 1 2 Audit 3 Governance & Nominating Human Resources, Compensation & Pension Complete disclosure of The North West Company Inc.’s corporate governance is provided in the Company’s Management Information Circular, which is available on the Canadian Securities Administrators’ website at www.sedar.com or in the investor section of the Company’s website at www.northwest.ca The North West Company Inc. 2011 Summary Annual Report 23 Shareholder information Fiscal Year Quarter Ended Share/Unit Price High Share/Unit Price Low Share/Unit Price Close Volume EPS/EPU1 2011 April 30, 2011 July 31, 2011 October 31, 2011 January 31, 2012 2010 April 30, 2010 July 31, 2010 October 31, 2010 January 31, 20112 2009 April 30, 2009 July 31, 2009 October 31, 2009 January 31, 2010 $ 22.50 22.50 20.85 20.63 20.72 $ 23.00 19.50 20.22 21.99 23.00 $ 19.60 17.48 16.75 18.70 19.60 $ 17.85 19.65 18.51 17.85 18.28 $ 17.02 17.60 17.02 19.27 19.93 $ 14.88 14.98 14.88 15.11 16.86 $ 19.40 19.78 20.23 18.78 19.40 $ 21.09 18.75 19.78 20.68 21.09 $ 17.94 16.35 15.65 16.98 17.94 22,417,768 5,885,378 5,802,416 4,020,971 6,709,003 24,813,768 4,899,200 4,148,526 5,118,932 10,647,110 20,080,407 4,068,297 5,289,346 6,004,601 4,718,163 $ 1.19 0.26 0.31 0.35 0.27 $ 1.44 0.37 0.42 0.46 0.19 $ 1.69 0.33 0.43 0.51 0.42 1 Net earnings per share (unit) are on a diluted basis. 2010 has been restated for IFRS. 2009 is reported under Canadian generally accepted accounting principles (CGAAP) Total Return Performance (% at January 31) This chart illustrates the relative performance of shares/units of The North West Company Inc. and its predessor, North West Company Fund, over the past five years. Effective January 1, 2011, North West Company Fund converted to a share corporation called The North West Company Inc. The index incorporates the reinvestment of dividends and income distributions. 175 150 125 100 75 50 25% 2007 2008 2009 2010 2011 2012 NWC/NWF.UN/NWF TSX Composite Consumer Durables/ Apparel Group Retailing Group Food/Staples Retailing Group 100 100 100 100 100 119 103 101 87 80 113 136 71 43 62 85 93 71 83 89 172 117 87 93 95 166 110 65 99 106 The North West Company Inc. Anticipated Dividend Dates* Record Date: March 30, 2012 Payment Date: April 16, 2012 Record Date: June 29, 2012 Payment Date: July 16, 2012 Record Date: September 28, 2012 Payment Date: October 15, 2012 Record Date: December 31, 2012 Payment Date: January 15, 2013 * Dividends are subject to approval by the Board of Directors 2012 Annual Meeting The Annual Meeting of Shareholders of The North West Company Inc. will be held on Wednesday, June 6, 2012 at 11:30 am at The Fort Garry Hotel, Grand Ballroom, 222 Broadway, Winnipeg, Manitoba. Transfer Agent and Registrar Canadian Stock Transfer Company Inc. (acts as administrative agent for CIBC Mellon Trust Company) Calgary and Toronto Toll-free: 1 800 387 0825 www.cibcmellon.ca Stock Exchange Listing The Toronto Stock Exchange Stock Symbol NWC ISIN #: CA6632781093 CUSIP #: 663278109 Number of shares issued and outstanding at January 31, 2012: 48,378,000 Auditors PricewaterhouseCoopers LLP Trademarks are used throughout this annual report in an editorial fashion with no intention of infringement. Printed in Canada on recyclable paper. ©2012 The North West Company Inc. Our thanks to the staff and customers who appear in photographs from Calgary, Alberta; Curacao, Netherland Antilles; Gjoa Haven, Nunavut; Iqaluit, Nunavut; Klawock, Alaska; Rankin Inlet, Nunavut; St. Thomas, U.S. Virgin Islands; Sand Point, Alaska; Winnipeg, Manitoba. Nor’Westers are rooted in the spirit of trading posts that began in 17th century North America, including store locations that have been in continuous operation for over 340 years. Since acquiring our northern retail network in 1987, we’ve grown an enterprising Canadian merchant business into a leading community retailer serving remote, rural and urban neighbourhoods. Now, as we celebrate our 25th Anniversary, we proudly uphold the pioneering legacy that inspires The North West Company today. For additional information about this report or for general information about the Company, contact the Corporate Secretary: The North West Company Inc. Gibraltar House, 77 Main Street Winnipeg, Manitoba Canada R3C 2R1 T 204.934.1756 F 204.934.1317 Toll-free 1.800.563.0002 investorrelations@northwest.ca www.northwest.ca 

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