Joseph E. Antonini gave in to pressure from disgruntled Kmart Corp. shareholders Tuesday, resigning as president and chief executive officer of the nation’s third-largest retailer.
Antonini’s departure was expected after two years of disappointing earnings and as Kmart’s struggled in its attempts to keep up with rivals WalMart, Sears and Target stores.
The Kmart board forced Antonini to relinquish Kmart’s chairmanship in January to Donald Perkins, a former CEO of Jewel Cos. Inc. The board said then the change would give Antonini more time to focus on Kmart’s core discount stores.
But institutional shareholders grew increasingly impatient with the pace of Antonini’s efforts, Perkins said in an interview. Kmart recently closed 110 poorly performing stores and is in the process of cutting 6,000 jobs.
“Shareholders were saying, ‘We don’t care what you’re trying to do, we don’t want to give you the time to do that,”’ Perkins said.
Shareholders were also unhappy with Kmart’s stock, which lost more than half its value in the past two years, dropping to the $12 range from a high of nearly $28 in November 1992.
Investors appeared pleased with the news of Antonini’s exit. Kmart’s stock rose 87 cents to $12.87 on the New York Stock Exchange trading.
In a statement, Antonini said, “External factors have made it increasingly difficult for our organization to focus on the tasks at hand.” He did not elaborate and declined to be interviewed.
But Kmart had plenty of internal problems, including inventory shortages and slipping sales at the Kmart stores.
The board agreed unanimously in a conference call Monday night to accept Antonini’s resignation, Perkins said.
Anthony N. Palizzi, executive vice president, will serve as interim president. Perkins said he did not expect a permanent president to be named before the May 23 annual meeting.
“With the kind of press speculation going on - ‘How much longer can he last?’ - it was almost like a countdown,” said Joseph Ronning, an analyst with Brown Bros. Harriman in New York. “It was inevitable.”
Antonini, 53, spent 31 years at Kmart. He led the retailer into its store renovation program, developed the Super Kmart Center format, and helped create popular merchandise collections from celebrities such as Jaclyn Smith and Martha Stewart.
The renovation program progressed well in the early 1990s, but began to sputter while competitors stole customers away.
Antonini wanted to sell minority stakes in Kmart’s specialty stores, including OfficeMax and The Sports Authority, to raise money for store renovations and to reduce debt. But his plan failed to win enough support from shareholders who demanded that Kmart give up the specialty chains and focus on fixing the discount stores.
Kmart instead sold majority stakes in the divisions.
In the past year Antonini brought in new managers to try to improve merchandising. But Kmart’s eight straight quarters of disappointing earnings weighed against him.
Analyst Ron Petrie of Roney & Co. in Detroit said that with the recent cost-cutting and changes in the executive suite, Kmart is well-positioned for a rebound.
“There are a lot of very strong people on the front bench there. They’re essentially all from outside the company with good track records. The seeds have been planted for a strong recovery.”
But Ronning said the most recent cost-cutting and executive changes had yet to address Kmart’s fundamental problems. Analysts have criticized the company for poor merchandising decisions.
“The efforts they’re taking now are similar to bailing water out of the ship as opposed to trying to win the race,” he said. “It still doesn’t change the basic problem, and that is competition. The competition keeps getting better all the time, namely Wal-Mart and Target.”
Kmart earned $145 million, or 31 cents a share, in the quarter ended Jan. 25. That compared with a loss of $1.19 billion, or $2.61 a share, in the same period a year ago.
Sales in the latest period fell to $10.44 billion from $11.01 billion.
For the year, Kmart’s earnings of $296 million, or 63 cents a share, compared with a 1993 loss of $974 million, or $2.15 a share. Sales totaled $34.03 billion, down 7.3 percent from $36.69 billion.
The losses were due to restructuring charges.
Kmart, based in suburban Detroit, operates nearly 4,000 stores worldwide, including Builders Square and Borders-Waldenbooks outlets. Of those, 2,316 are domestic Kmart stores and Super Kmart Centers.