By Evan Clark
This story first appeared in the October 8, 2002 issue of WWD. Subscribe Today.
NEW YORK — Shares of Sears, Roebuck & Co. dropped 14.3 percent after the firm laid out lower-than-expected third-quarter projections and shed light on management changes made last week.
In an unusual admission, Alan Lacy, chairman and chief executive, told analysts on a conference call that Kevin Keleghan, president of Sears’ credit and financial products division until last Friday, “left the company at my request because I lost confidence in his personal credibility. To discuss it further does not serve any purpose.”
Keleghan’s departure, Lacy said, did not relate to business performance and doesn’t signal a change in strategy.
Lacy added that there was “absolutely no correlation” between Keleghan’s dismissal and Sears’ recent adjustment from a change in accounting principle to a change in estimate that pulled $191 million out of the second quarter and added it to the first quarter.
In a separate development, Sears said that Janine Bousquette will join the firm Nov. 1 in the new post of executive vice president and chief customer and marketing officer. The former executive of PepsiCo, Procter & Gamble and eToys will assume duties previously handled by David Selby, senior vice president of marketing, who will leave the firm Oct. 15.
As reported, Paul Liska has succeeded Keleghan as president of the firm’s credit and financial products unit. Glenn Richter succeeded Liska as chief financial officer.
The Hoffman Estates, Ill.-based firm said its third-quarter earnings per share would come in at 80 to 82 cents, including 3 cents worth of dilution for the acquisition of Lands’ End. Wall Street’s consensus estimate had the firm pegged for income of 86 cents a share. The retailer also continued to stand by its estimates for the full year, calling for earnings of $5.15 a share. Analysts have been looking for $5.27 a share. Sears is slated to report third-quarter earnings on Oct. 17.
Shares of the firm were off $5.39 to close at $32.25 on the New York Stock Exchange Monday. Other broadline retailers enduring sinking stock prices included: Saks, down 8.1 percent to $9.24; Target, 7.8 percent to $26.15; Nordstrom, 7.5 percent to $15.71; Federated, 5.8 percent to $26.40; Dillard’s, 5.4 percent to $16.53; J.C. Penney, 5 percent to $14.58; May Department Stores, 4.8 percent to $22.02, and Wal-Mart, 2.7 percent to $50.35.
Overall, the Standard & Poor’s retail index outperformed the broader market and inched up 1 percent to close at 265.46. The S&P 500 lost 1.9 percent to end at 785.28.