NEW YORK (CNNfn) - Sears, the second largest retailer in the United States, announced on Wednesday that it has begun searching for a new chairman and chief executive to replace retiring CEO Arthur Martinez.|
Martinez, 60, who is credited with turning around the retail chain -- which is second only to Wal-Mart in terms of sales and has annual revenue of $41 billion — announced retirement plans earlier this year, and initiated the search for a new CEO himself, the company said.
"I am very proud of what we've accomplished in the past eight years," said Martinez in a prepared statement. "In 1992 some thought Sears was on the brink of extinction, but Sears management and associates successfully restored the company's profitability, increased operating profits tenfold, grew our market share in virtually all of our businesses and made other solid sustainable improvements in our retail business."
Martinez and six other directors met in Chicago last week to pick an executive search firm, eventually settling on Heidrick & Struggles International Inc. of Chicago.
"Sears' performance over time, including achievement of record earnings in 1999, are a tribute to Arthur's leadership, and the board is certainly pleased with his record of accomplishments as chairman and CEO," said Warren Batts, Sears' longest serving board member. "Of course we respect his decision to plan his retirement, and are fortunate that he will be working with us to choose a successor and ensure a smooth transition over the course of the year."
Martinez came to Sears from Saks Inc.'s (SKS: Research, Estimates) Saks Fifth Avenue in 1992. He closed unprofitable stores, terminated the famous Sears catalog, and initiated the well-known "softer side of Sears," advertising campaign.
The news comes on the heels of several big moves by the Hoffman Estates, Ill.-based retailer, including Tuesday's announcement of a joint marketing and sales agreement with America Online. The company also recently announced a new online business-to-business marketplace for retailers with Oracle (ORCL: Research, Estimates) and Carrefour, Europe's biggest retailer, and the formation of a new Web site featuring home improvement expert Bob Vila.
Although the company reported strong fourth-quarter earnings, far exceeding analysts' estimates, sales at its hallmark department stores rose just 0.9 percent due mainly to fewer marketing efforts, analysts said.
In recent years, competition from giant discount chains such as Wal-Mart (WMT: Research, Estimates) and Target (TGT: Research, Estimates) has squeezed Sears, as well as other established department stores including J.C. Penney (JCP: Research, Estimates), which has been struggling with sales and earnings.
Bad debt has also plagued the company's credit department, which has settled lawsuits relating to delinquent accounts. The company has revamped its credit policies and is streamlining its apparel efforts, offering more private label and national brands while reducing its overall number of suppliers, according to Hoover's.
Thomas Tashjian, an analyst with Bank of America Securities, said Wednesday's announcement is just the beginning of what is sure to be a long, slow process as Martinez continues to focus on improving the retail business.
"I've know Arthur for a very long time, and I think he's done a marvelous job over at Sears," Tashjian said. "I also see that he's pretty focused right now on improving the retail operations as is evidenced by the fourth-quarter results. It's a big company, and it requires the right executive to be put in place, and a transition period. So I think these are the early days of a long process."
Shares of Sears (S: Research, Estimates) were up 1/16 to 28-3/16 on the New York Stock Exchange in early Wednesday afternoon trading.