Sears, Roebuck and Co., moving to inject some life into its faltering retail operations, Monday hired a new chief executive officer with a background in finance to run its Merchandise Group, filling a job that Sears Chairman Edward A. Brennan has been performing for the last two years.
But the hiring of Arthur C. Martinez, 52, vice chairman of Saks Fifth Avenue, as Merchandise Group chairman and CEO may have set some new standards in corporate intrigue. It certainly left Milwaukee-based P.A. Bergner & Co., parent of Carson Pirie Scott & Co., grasping at straws.
Bergner, which is operating under Chapter 11 protection, had been scheduled to appear in U.S. bankruptcy court at 10 a.m. Tuesday to seek approval for offering Martinez a 5-year, $10 million contract to become its chief executive officer. Late Monday, Bergner said it instead would file a motion to retract its request to hire a CEO.
The ”no comments” flew thick and fast. Martinez, in a telephone interview, declined to discuss his negotiations with either company, other than to confirm that he had held talks with Bergner. Bergner, which earlier had taken pains to specify the pronunciation of Martinez`s name (accent on the first syllable), would not confirm it had made him an offer. And Sears, for its part, declined to divulge what kind of contract it had offered to lure Martinez.
Brennan did say agreement for an employment contract between the Merchandise Group and Martinez was reached Monday morning, and that negotiations had been going on for some time. Martinez, who will be based at the division`s new Hoffman Estates headquarters, will begin work Sept. 1.
Brennan, chairman and CEO of the parent company, added oversight of the Merchandise Group to his other duties two years ago, pushing aside retailing chief Michael Bozic. (Bozic has since become chief executive officer of Hills Department Stores.)
Brennan`s move was intended to shake up the division, which he had once led, and to improve its results. In January 1992, the Sears board named James Denny vice chairman to give Brennan more time to focus on the problems in the retail and catalog operations, where sales have fallen behind those of Wal-Mart Stores Inc. and Kmart Corp. to make Sears the nation`s No. 3 retailer.
”We have accomplished a great deal over the past two years and took an enormous amount of cost out of the business,” Brennan said in an interview after Monday`s announcement. ”We have done some things that for someone coming in from the outside would have been impossible to do. I think we are primed to move.”
During that time, Brennan eliminated 48,000 positions and cut costs by $700 million. But company observers say pressure to improve resrepair scandal that erupted in California and New Jersey recently, with government regulators accusing Sears auto centers of prescribing unnecessary repairs.
The announcement of Martinez`s hiring, virtually two years to the day after Brennan assumed command of the Merchandise Group, surprised Sears employees as well as industry analysts.
”It was the best kept secret,” said one employee, marveling that the move hadn`t made it onto the corporate grapevine. ”Nobody knew anything about it until they found the announcement on their desks.”
Richard Nelson Jr., retail analyst with Chicago-based Duff & Phelps Inc., and employees said Martinez`s hiring could help the Merchandise Group recover its leadership role within the company, which lately has realized better results from its insurance, real estate and brokerage businesses. The losses of the group`s department store operations soared to $140.3 million for the first six months of 1992, though they were offset by income from its international and credit operations.
”(Martinez) will have the focus we need,” said one employee, who said the Sears headquarters was buzzing. ”He`s soft lines. He`s department stores. I`m tickled to death.”
Nelson said he didn`t expect to see any changes as a result of Martinez`s hiring, however. ”I don`t really see any change in strategy,” he said.
”He`s going to emphasize execution of the strategies in place.”
Sears stock was up as much as $1 during the day, and closed up 37 cents at $40.62 on the New York Stock Exchange.
In a telephone interview, Martinez said Brennan had given him carte blanche to make changes. ”He`s given me a clear indication that the things I think need being done he will support being done,” he said.
But Martinez said he wanted to wait until he got to know the workings of the group before making any judgments about what needed fixing.
”If I said I had six things that would fix it and here they are, you`d call me a fool,” he said. ”I don`t have the diagnosis.”
While his recent experience at Saks is with a ”soft goods” (clothing)
retailer, Martinez noted that he had directed operations at a furniture store that reported to him while he was with Batus Inc., the former owner of Chicago-based Marshall Field & Co. While with Batus, Martinez was responsible for retail operations at Field`s, Saks, J.B. Ivey and Breuner`s department stores.
When Batus sold its department-store operations to various buyers in 1990, Martinez went to New York with Saks as a co-vice chairman, along with Field`s Chairman Philip Miller.
Martinez said he was in charge of ”all non-merchandise functions” for Saks; his previous jobs included chief financial officer for Saks and senior positions in finance for RCA Corp.
In Milwaukee Monday, Bergner officials who thought they soon would be announcing the appointment of Martinez as their new chief executive-to succeed Alan Anderson, who left in May 1991-were left instead trying to decide how to deal with the sudden change.
