Shake-up in Aisle Five

Kmart boots most of senior management, brings in turnaround specialists. Also: Boeing's CFO gets new title, and Department 56 loses No. 1 finance d...
Craig SchneiderMarch 12, 2002

How many CFOs does it take to screw in a Blue light bulb? One—at least that’s the hope at Kmart… Bankrupt retailer named Albert Koch to succeed John McDonald Jr. as CFO… Third CFO at Kmart in 10 months… Koch is chairman of turnaround management firm Jay Alix & Associates… McDonald leaving the company after barely 4 months on the job… Kmart gave no reason for departure… One possibility: company declared bankruptcy last month… Chapter 11 rarely endears management to shareholders… Indeed, practically entire senior-level management at Kmart got the boot on Monday… Koch, previously finance chief of Oxford Health Plans, led the restructurings of Ryder System and Allegheny General Hospital… Share prices of stock of both those companies now trading at or near 52-week highs…

Kmart also brought in Ted Stenger, a principal of Jay Alix… Stenger will assume vacant treasurer spot… Stenger served as turnaround adviser at Allied Holdings, Fruit of the Loom, FINOVA Group, and The Leslie Fay Cos…. Julian Day fills the vacant Kmart COO spot… Day previously CFO-turned-COO of Sears Roebuck & Co. as well as CFO of Safeway Inc.…

McDonald was promoted to CFO in mid-November, stepping into the role Jeffrey Boyer (ex-Sears Roebuck) left after just six months… McDonald joined Kmart in 2000 as treasurer and was promoted to senior vice president of finance and treasurer before taking the top finance spot… On Friday, Kmart announced shuttering of 284 underperforming stores… Company also laying off 22,000 workers… Martha Stewart not one of them… There is no God… Retailer recently strengthened its financial position, getting court and creditor approval of new $2 billion credit facility.

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>> Boeing Co. CEO Phil Condit expanded the roles of three top executives Monday… The move elevates the three to the chairman’s office… All this in preparation for planned retirement in June of vice chairman Harry Stonecipher… Among the elevated: CFO Michael Sears, who will now also hold the title of office of the chairman… Sears will continue in his role as CFO, while adding accountability for corporate strategy development and airplane maker’s annual business planning… Will also continue to serve as chairman of captive financing unit Boeing Capital Corp…. Management at the world’s most famous planemaker said on Friday that it would take an aftertax impairment charge of $1.4 billion to $1.9 billion in Q1 to reflect company’s adoption of Financial Accounting Standard No. 142… That standard requires companies to test whether acquired goodwill is overvalued… Apparently it was for Boeing.

>> Tom Tomlinson resigning his CFO post at Department 56 effective March 19… Tomlinson jumping to a privately held medical diagnostic equipment firm… Department 56, a collectibles and specialty giftware company, says Gregg Peters (currently finance managing director and principal accounting officer) will coordinate financial operations until a replacement for Tomlinson is named… Last week, Arthur Andersen paid $11 million to Department 56 to settle lawsuit alleging that the consulting firm gave it poor advice on an upgrade to a computer systems project… $11 million bit of a comedown from the $6 billion company was seeking.