It takes a village
Jennifer Marks -- Home Textiles Today, February 4, 2002
You can rap Kmart for a lot of things over the years, but as the company enters bankruptcy for the first time in its 102-year history, there is one decision it deserves credit for: hiring a chief restructuring officer.
The post may be a newly created position at Kmart, but it is not unheard of in other industries. Example: Stephen Cooper, who last week was named interim ceo and chief restructuring officer at Enron and who previously held the position of vice chairman and chief restructuring officer at Laidlaw Inc.
The retail world is rarely visited by a chief restructuring officer — not because there hasn't been plenty of work about for one to do, but because in the retail world a bankrupt company tends to ditch its old ceo and haul in an interim chief.
But contrary to the typical behavior of post-bankruptcy retail companies, Kmart did not deep-six its ceo. Instead, it plucked the chairman part of the title from Chuck Conaway, directing him to focus on running the day-to-day business as chief executive.
That's the laudable part.
Conaway of late has been portrayed as The Man Who Could Not Halt Kmart's Decline. (And, gee, he's had 18 whole months to do it.) What is much overlooked these days is the fact that Conaway has spent his rather brief tenure at the company attacking the lousy back-end systems that have long been its Achilles' heel. One of Conaway's chief strengths at his previous posting at the CVS drugstore chain was tightening up operations.
There's unquestionably more plowing to be done in Troy. And the fact that Kmart's board chose to clear his plate of Chapter 11-related distractions should be viewed as an encouraging sign.
Heaven knows, if there's one thing Kmart needs, it's focus. Remember that 18 months ago it was officially considered to be just partway through its turnaround strategy — a quasi feat that had taken it five long years to accomplish. Completing the job, if indeed it can be done, could easily take a similar amount of time — notwithstanding Kmart's current intention to wrap up its reorganization by 2003.
Extremely large, troubled companies that have been mandated to traverse so much lost ground do not turn around quickly. The bigger the ship, the more hands it takes to set it on a proper course.
The back-breaking business of dealing with bankruptcy reorganization falls to Ronald Hutchinson, now on board as executive vp and chief restructuring officer. Wall Street seems comfortable with his credentials — most recently as cfo during the reorg of Advantica Restaurant Group, and before that as one of the players involved in Leaseway Transportation's emergence from Chapter 11.
He will tag team with Kmart board member James Adamson, now the company's non-executive chairman of the board.
They will need to cast a pitiless eye on the 2,114-unit store base as they look to separate the wheat from the chaff. That in itself is a formidable assignment. Appeasing banks, creditors and Wall Street while simultaneously crafting a new position for the company promise to be equally onerous chores.
Good thing there's more than one guy on board to tackle the job.
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