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Sears Rescuer Martinez to Retire by Year's End

Retailing: Search for successor begins amid uncertainty as company faces new challenges.

March 16, 2000|From Associated Press

CHICAGO — Arthur C. Martinez, widely credited with rescuing Sears, Roebuck & Co. from the brink of failure in the mid-1990s, plans to retire from the helm of the giant retail chain by the end of this year. The search for his replacement has already begun.

The announcement on Wednesday signals more uncertainty for the century-old company, which ruled the retail world for decades but lost customers to discount stores and higher-priced competitors in recent years. Sears also faces new challenges amid the rapid growth of the Internet.

Sears has hired executive search firm Heidrick & Struggles International to evaluate candidates.

"These are big shoes to fill. Martinez is a great leader, but that doesn't mean this is bad for Sears," said Walter Loeb, who runs the retail consulting firm Loeb Associates.

Under Martinez's watch, Sears hit some dramatic highs and lows.

A former Saks Fifth Avenue executive, Martinez arrived at a money-losing, sinking Sears as its top merchant in 1992, spending two years in that job before becoming chairman, president and chief executive.

He promptly undertook a major restructuring--closing unprofitable stores, spinning off the insurer Allstate and transferring ownership of the famed Sears Tower in Chicago into a trust to reduce debt.

Shaking up Sears' stodgy image, he also added more fashionable apparel to appeal to female customers and launched the successful "Softer Side of Sears" ad campaign to promote the changes.

The results paid off by 1996 with significantly better sales, profit and stock price, and Martinez, 60, was widely praised for leading a Sears renaissance.

"You have to consider Martinez as the savior of Sears," said Burt Flickinger, managing director of Reach Marketing in Westport, Conn. "If he did not come in at the time that he did, the company would be on its knees today."

The turnaround, however, soured somewhat by 1997. Sears headed into a new slump largely as the result of rising credit card delinquencies among customers drawn to the retailer by its credit promotions. There was also an exodus of customers to such companies as Macy's on the high end and Old Navy and Target among discounters.

With sales sagging and weak earnings growth projected, Sears last year laid off workers and shook up the executive suite, creating an office of the chief executive. Martinez now shares corporate decision-making with Alan J. Lacy, president of services, and Julian C. Day, executive vice president as well as chief operating and financial officer.

That move, analysts said, should make Martinez's departure less troublesome for Sears. But he added that Sears would be smart to look for a new leader outside of the company, focusing on one with Internet or global retailing experience.

Sears stock rose 94 cents to close at $29.06 on the New York Stock Exchange.

The company, which has more than 850 department stores and 2,100 specialty stores, is expected to earn 46 cents a share, an increase from 38 cents a year earlier. That would follow a 29% jump in fourth-quarter profit.

"The search for someone outside the company could be very good for Sears and the future of Sears," Loeb said.

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