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Blue Light CFOs?

Struggling retailer Kmart has gone through an awful lot of finance chiefs of late. Will John McDonald stick?
Tim ReasonJanuary 4, 2002

CFO Martin Welch lasted just a year after Kmart directors brought in Chuck Conaway as CEO and charged him with turning around the fortunes of the slumping retailer. “I thought we hit it off really well,” recalls Welch, who had plenty of turnaround experience of his own from 10 years at Chrysler and as CFO of Federal Mogul from 1991 to 1995. “But as the culture and emphasis changed,” he says, “Chuck wanted somebody who had a very strong retail operational background, which I did not have.”

Perhaps. But Welch’s replacement, Jeffrey N. Boyer, hired from retailer Sears, Roebuck and Co., left even quicker than Welch. Boyer departed in November after only six months on the job. He was replaced by Kmart’s former treasurer, John T. McDonald, who has the added qualification of having worked for Conaway at CVS.

McDonald’s fate now hinges, no doubt, on Conaway’s fate. The CEO’s fix-it plan has so far failed to improve financial results, even at a time when consumers are flocking to discounters in droves. In the third quarter, net sales decreased 2.2 percent, and the retailer lost $224 million (including restructuring charges). “Our third- quarter results clearly fell short of our own expectations,” Conaway told analysts on November 27.

As for Welch, he’s now looking for board positions where his finance background might help strengthen an audit committee. Of course, there’s another nice perk of joining a board. “If the company is not doing well, it is the board’s responsibility to step in and evaluate whether it is the leadership that’s the problem,” he notes. If Welch is involved in any more management changes, it won’t be on the receiving end.