Yellow light special – Turnaround Teamwork – Kmart Corp.’s new CFO, Albert Koch faces major challenges – Brief Article
Kmart Corp.’s new CFO, Albert Koch, will need to proceed with caution. The U-turn specialist from turnaround firm Jay Alix & Associates has a bumpy road ahead of him. In March, Koch became the company’s fourth CFO in a year–just a few days after the bankrupt Troy, Mich.-based retailer posted a loss of $753 million for the four weeks ending February 27. He succeeded John T. McDonald Jr., who served for only four months. “They needed someone who’s been there before–someone who can fix the things that aren’t working,” says Marie Driscoll, an analyst at Argus Research Co.
Koch will get plenty of help from some brothers-in-arms. Kmart’s new CEO, James B. Adamson (who replaced Charles Conaway), worked with Koch in 1998 to resuscitate bankrupt Oxford Health Plans. New Kmart treasurer and fellow Jay Alix partner Ted Stenger also has an impressive turnaround record. But despite the new firepower, Kmart could prove unsalvageable. “It’s not just a turnaround; they are in survival mode,” says Kevin Gale, a fixed-income analyst at McDonald Investments Inc. “They have huge inventory management problems.”
Driscoll adds that Kmart’s loss-leader pricing strategy is flawed and that it needs to close more stores than the 283 announced so far. “It’s tough to compete with Wal-Mart,” says Driscoll. “It’s a losing battle.”
COPYRIGHT 2002 CFO Publishing Corp.
COPYRIGHT 2002 Gale Group