In Business This Week: Headliner
Charles Conaway: Attention Kmart Investors
Critics have often contended that Kmart needs younger blood. It's safe to say the Troy (Mich.) discount chain got a big infusion on May 31 when it named Charles Conaway as its new chairman and CEO.
Still a few days shy of his 40th birthday, the athletic Conaway has the energy to fix Kmart's nagging distribution and store-operation problems, according to board member Thomas Stallkamp. Conaway comes to Kmart from drugstore giant CVS, where he was president and chief operating officer. Conaway's predecessor was Floyd Hall, 61, who led Kmart's turnaround effort by revamping nearly 2,000 stores and introducing successful private-label brands such as Martha Stewart Everyday.
While Kmart's sales and profits have improved, plenty of tough work remains. Conaway, who started work immediately, is already on the case. He'll focus on two big problems that lead to customer disappointment: technology systems and inventory distribution. Good thing he has fresh legs.By Joann Muller in Detroit; Edited by Anne NewmanReturn to top
Lawyers Like These Calvin Briefs
Imagine the horror of putting buff supermodels in high-end underwear and jeans, only to watch your manufacturer dump the stuff at discount outlets. That's the nightmare that designer Calvin Klein claims he has endured at the hands of Warnaco Group and its chairman, Linda Wachner. On May 30, Klein's fashion house sued, charging trademark violation and breach of fiduciary duty. He claims Warnaco is diluting its brand and making underwear for off-price retailers, instead of dumping only irregular or overstocked items. Retorts Wachner: "With Calvin Klein having tried and failed to sell his business to different companies in recent months, including to Warnaco, you have to wonder why he resorted to this tactic."Edited by Anne NewmanReturn to top
Phone Rates: We All Get a Break
The Federal Communications Commission finally is putting to rest a longstanding dispute between long-distance carriers and local phone companies. On May 31, regulators signed off on a compromise plan, effective July 1, to lower so-called access fees, which LD carriers pay to local phone companies when they originate and terminate calls. Fees were inflated in the past to help pay for universal service, a subsidy that keeps local rates affordable for all Americans. But Congress said in the 1996 Telecommunications Act that access fees must be reduced and universal service funded in other ways. The FCC is cutting access charges in half over five years, to 1.1 cents a minute. Consumers are likely to realize $2.1 billion in savings the first year. In addition, certain fixed monthly charges for residential users will be eliminated.Edited by Anne NewmanReturn to top
HP Nets a Sweet Deal at Amazon
Look out for Hewlett-Packard, computer makers. After three rocky years, HP has a head of steam. It's the leading U.S. seller of home PCs and is gaining on higher-end gear. On May 31, HP said it will provide 90% of the servers, storage, and related Net gear purchased by Amazon.com, a longtime Sun Microsystems customer. CEO Carly Fiorina said HP's computer operating margins should double in the next six to nine months. Nevertheless, HP's stock fell 3% that day when Fiorina failed to announce the expected divestiture of HP's Verifone unit.Edited by Anne NewmanReturn to top