Kmart CEO leaves firm in wake of bankruptcy, store closings

DETROIT -- The struggling Kmart Corp. replaced its chief executive Monday, three days after announcing a turnaround plan that will trim 22,000 jobs and close 284 stores.

Chuck Conaway is being replaced effective immediately by Kmart chairman James Adamson, a turnaround expert and longtime board member of the nation's third biggest discount chain.

The Troy, Mich.-based retailer filed for Chapter 11 bankruptcy protection on Jan. 22, following lower-than-expected holiday sales, downgrades by several credit rating agencies and a stock dive.

No word on terms

Adamson said it was Conaway's decision to leave, though the "separation was an evolving process." He said Conaway submitted his resignation Saturday, but declined to discuss terms.

In May 2000, Conaway signed a five-year contract worth $1.4 million per year.

"While I have been contemplating this departure for some time given my family needs and professional goals, it was critical that the transition go smoothly," Conaway said in a statement.

The news did not come as a surprise to analysts, who have maintained that Conaway failed to come up with an appropriate turnaround strategy. One of Conaway's big mistakes was trying to undercut Wal-Mart prices; Wal-Mart only further lowered prices.

"He also did nothing whatsoever to encourage consumers to come to the store and buy merchandise," said Kurt Barnard, president of Barnard's Retail Trend Report in Montclair, N.J.

Adamson has a record of helping troubled companies, including Denny's parent Advantica Restaurant Group, Burger King Corp. and drugstore chain Revco Inc.

Kmart also named Albert A. Koch, chairman of turnaround management firm Jay Alix & Associates, as its new chief financial officer. Julian Day, former chief operating officer of Sears, Roebuck and Co., was named president and chief operating officer.

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On the Net:

Kmart: http://www.kmartcorp.com