Yucaipa Vet Named Pathmark C.E.O., Replacing Scott
CARTERET, N.J. -- Pathmark Stores Inc. here said yesterday it has named John T. Standley, former c.f.o. at Camp Hill, Pa.-based Rite Aid Corp., as its new c.e.o., effective Aug. 29. Standley succeeds Eileen Scott, who has been c.e.o. since 2002, and will now, according to the company, "[turn] her time and focus to other interests."
The changing of the guard in the top office at Pathmark came as no surprise to many industry observers, who had speculated when the Yucaipa Cos., LLC, first said last spring it would invest $150 million in the cash-strapped chain, that the Los Angeles-based private equity firm would likely replace Scott with an outside retail executive.
Standley, 42, has a longstanding relationship with Yucaipa. In the 1990s, Standley served in executive posts at several formerly Yucaipa-owned chains, including Ralphs, Fred Meyer, Smittys, Smith's Food & Drug, and Food 4 Less Supermarkets. He worked with Yucaipa to merge Ralph's/ Food 4 Less into Fred Meyer, which was the fifth-largest supermarket company in the United States, before it was acquired by Kroger in 1999 for $8 billion. At Rite Aid, Standley played an important role in the company's financial and operational turnaround.
"John is exactly the right leader for Pathmark," said nonexecutive chairman James L. Moody Jr. "His extensive retail background and proactive management style complement Yucaipa's vision for the company. The board is confident that John will bring a renewed focus on execution and performance."
Added Ron Burkle, the billionaire who founded Yucaipa and has spearheded its aggressive investment strategy in the supermarket segment: "In the 18 years that I have known John, he has exceeded our expectations at every opportunity by significantly improving operating results and strengthening the management team in all of our supermarket investments."
Standley said he would work to "to grow sales, develop new stores, and expand Pathmark's market position."
In a statement, Pathmark s.v.p. of retail development Harvey Gutman called Standley "a recognized leader in the food and drug retailing industry…and a seasoned executive with broad-based retail experience."
At a conference call today Standley said he planned to meet with Pathmark's management team to develop a comprehensive strategy for growing the business. He added that he intended initially to focus on increasing top-line growth through such avenues as store execution and merchandising, and adding to and improving the store base, as well as "diligence and creativity in expense control." Standley was optimistic about Pathmark's business going forward, characterizing it as having "great potential."
Standley said he was inspired by many of the supermarkets he had worked for, such as Ralphs, which he noted went from a "nuts-and-bolts retailer" to one with a focus on perishables and home meal replacements. He also expressed admiration for similar initiatives by HEB.
Commenting on the grocer's new leader, Burt Flickinger, of the New York consulting firm Strategic Resource Group, said, "It's always great when you can get a person with terrific multicompany experience, like Standley." Flickinger added, however, that Pathmark has been suffering a "brain drain" of executive talent to such competitors as Stop & Shop, ShopRite, A&P, and Wegmans.
Flickinger said that the outgoing Scott, whose broad institutional knowledge, accumulated over a "lifetime" of working at Pathmark, would have been invaluable, was not given enough time to execute a turnaround. "She would have needed a few more years," Flickinger said, adding that Scott had had to work with an undercapitalized company; and after it was recapitalized by Yucaipa, she had had only a few weeks to make improvements.
The consultant, who disclosed he has been a Pathmark shareholder for the past two decades, said the company had experienced disappointing sales this summer as a result of being "caught in the crossfire" of highly successful rival initiatives, among them ShopRite's "spectacular" online-ordering program, ShopRite at Home; A&P's newly introduced fresh format, which has led to double-digit increases in produce and floral sales; and Stop & Shop's major expansion plans, which included the opening of two Super Stop & Shops on Staten Island, formerly one of Pathmark's biggest markets.
Scott's departure from the company was preceded by the resignation of Yucaipa's Tom Dahlen this month from Pathmark's board. Dahlen had been overseeing the retailer's business for the private equity firm. Flickinger interpreted the sequence of events as "an indication that business may be soft this quarter."
In related news, Rite Aid said that Kevin Twomey, the company's s.v.p. and chief accounting officer, has been appointed acting c.f.o., effective immediately.
Twomey, 55, joined Rite Aid in 2000 after serving as s.v.p. of finance and control for Fleming Cos. He joined Fleming in 1989 after 17 years with Deloitte & Touche, where he was a partner.
As acting c.f.o., Twomey will report to Mary Sammons, Rite Aid's president and c.e.o. Sammons formerly was president and c.e.o. of Fred Meyer prior to joining Rite-Aid.
The changing of the guard in the top office at Pathmark came as no surprise to many industry observers, who had speculated when the Yucaipa Cos., LLC, first said last spring it would invest $150 million in the cash-strapped chain, that the Los Angeles-based private equity firm would likely replace Scott with an outside retail executive.
Standley, 42, has a longstanding relationship with Yucaipa. In the 1990s, Standley served in executive posts at several formerly Yucaipa-owned chains, including Ralphs, Fred Meyer, Smittys, Smith's Food & Drug, and Food 4 Less Supermarkets. He worked with Yucaipa to merge Ralph's/ Food 4 Less into Fred Meyer, which was the fifth-largest supermarket company in the United States, before it was acquired by Kroger in 1999 for $8 billion. At Rite Aid, Standley played an important role in the company's financial and operational turnaround.
"John is exactly the right leader for Pathmark," said nonexecutive chairman James L. Moody Jr. "His extensive retail background and proactive management style complement Yucaipa's vision for the company. The board is confident that John will bring a renewed focus on execution and performance."
Added Ron Burkle, the billionaire who founded Yucaipa and has spearheded its aggressive investment strategy in the supermarket segment: "In the 18 years that I have known John, he has exceeded our expectations at every opportunity by significantly improving operating results and strengthening the management team in all of our supermarket investments."
Standley said he would work to "to grow sales, develop new stores, and expand Pathmark's market position."
In a statement, Pathmark s.v.p. of retail development Harvey Gutman called Standley "a recognized leader in the food and drug retailing industry…and a seasoned executive with broad-based retail experience."
At a conference call today Standley said he planned to meet with Pathmark's management team to develop a comprehensive strategy for growing the business. He added that he intended initially to focus on increasing top-line growth through such avenues as store execution and merchandising, and adding to and improving the store base, as well as "diligence and creativity in expense control." Standley was optimistic about Pathmark's business going forward, characterizing it as having "great potential."
Standley said he was inspired by many of the supermarkets he had worked for, such as Ralphs, which he noted went from a "nuts-and-bolts retailer" to one with a focus on perishables and home meal replacements. He also expressed admiration for similar initiatives by HEB.
Commenting on the grocer's new leader, Burt Flickinger, of the New York consulting firm Strategic Resource Group, said, "It's always great when you can get a person with terrific multicompany experience, like Standley." Flickinger added, however, that Pathmark has been suffering a "brain drain" of executive talent to such competitors as Stop & Shop, ShopRite, A&P, and Wegmans.
Flickinger said that the outgoing Scott, whose broad institutional knowledge, accumulated over a "lifetime" of working at Pathmark, would have been invaluable, was not given enough time to execute a turnaround. "She would have needed a few more years," Flickinger said, adding that Scott had had to work with an undercapitalized company; and after it was recapitalized by Yucaipa, she had had only a few weeks to make improvements.
The consultant, who disclosed he has been a Pathmark shareholder for the past two decades, said the company had experienced disappointing sales this summer as a result of being "caught in the crossfire" of highly successful rival initiatives, among them ShopRite's "spectacular" online-ordering program, ShopRite at Home; A&P's newly introduced fresh format, which has led to double-digit increases in produce and floral sales; and Stop & Shop's major expansion plans, which included the opening of two Super Stop & Shops on Staten Island, formerly one of Pathmark's biggest markets.
Scott's departure from the company was preceded by the resignation of Yucaipa's Tom Dahlen this month from Pathmark's board. Dahlen had been overseeing the retailer's business for the private equity firm. Flickinger interpreted the sequence of events as "an indication that business may be soft this quarter."
In related news, Rite Aid said that Kevin Twomey, the company's s.v.p. and chief accounting officer, has been appointed acting c.f.o., effective immediately.
Twomey, 55, joined Rite Aid in 2000 after serving as s.v.p. of finance and control for Fleming Cos. He joined Fleming in 1989 after 17 years with Deloitte & Touche, where he was a partner.
As acting c.f.o., Twomey will report to Mary Sammons, Rite Aid's president and c.e.o. Sammons formerly was president and c.e.o. of Fred Meyer prior to joining Rite-Aid.