Kmart Corp. (Troy, Mich.) has announced a top-level management shakeup as it attempts to crawl out from under the biggest crisis in its 40-year history. Charles Conaway has been replaced as chairman of the board, by long-time board member James Adamson, though he'll continue as the retailer's ceo. And former president and coo Mark Schwartz is no longer with the company. No replacement has been named.
Adamson, 53, is the former chairman, president and ceo of Advantica Restaurant Group, Inc. (Denny's, CoCo's, Carrow's). He had previously been ceo of Burger King, executive vp of marketing for Revco Inc. and a senior executive at Target Corp. He has served on the Kmart board since 1996.
Adamson is credited with helping pull Advantica — then known as Flagstar — out of bankruptcy in 1998. And he helped repair Denny's reputation after a series of racial discrimination lawsuits in the 1990s.
“Along with the other Kmart directors, I am pleased that Jim Adamson has agreed to provide his counsel and unique perspective at this critical time,” Conaway said. “His extensive experience in retail and in managing change at companies undergoing massive transformation is a resource that we believe will be invaluable to our senior management team. We are looking forward to working closely with him.”
“It has been my privilege to serve on the Kmart board since 1996,” Adamson said, “and during that time I have developed high regard for the company's loyal and hard-working people, who remain among its most valuable assets. I am looking forward to working with them, and contributing what I have learned through my past experiences, as we take steps to address the company's current financial and operational issues.”
Kmart said only that it is continuing to review its current and prospective liquidity position and business plans for the 2002 and 2003 fiscal years. The company is also continuing discussions with its lenders regarding existing and possible supplemental financing facilities. “We appreciate the loyalty Kmart has received from our customers and the continuing support shown by many of our vendors and other business partners,” Conaway said.
Kmart stock has plunged 70 percent in two weeks, in the wake of slipping sales and persistent Wall Street talk of a bankruptcy filing. Standard & Poor's dropped Kmart from its prestigious 500 index on Wednesday.
Despite (or perhaps because of) the management shakeup and Kmart's statement that it “continues to address its current financial and operational challenges,” the company's stock continued to drop Thursday, closing at $1.56, less than one-third of its value at the beginning of the year.
The last time Kmart resorted to such top-level changes was in 1995, when falling sales led it to replace chairman and ceo Joseph Antonini.