Kmart CEO leaves company

Discount retailer appoints turnaround expert to take over

? Kmart Corp.’s chief executive left the nation’s third biggest discount chain on Monday, three days after the company operating under bankruptcy protection announced plans to close 284 stores and cut 22,000 jobs.

Chuck Conaway will be replaced immediately as CEO by Chairman James Adamson, a turnaround expert and longtime Kmart board member.

The Troy, Mich.-based retailer filed for Chapter 11 bankruptcy protection on Jan. 22, following lower-than-expected holiday sales, downgrades by several credit rating agencies and a stock dive.

“While I have been contemplating this departure for some time given my family needs and professional goals, it was critical that the transition go smoothly,” Conaway said.

Conaway, who signed a five-year contract with Kmart in May 2000, was replaced as Kmart chairman by Adamson days before the bankruptcy filing.

Before joining Kmart, Conaway had won many fans on Wall Street as the No. 2 executive at drugstore chain operator CVS, which he helped build into an industry powerhouse with more than 4,100 stores and annual sales topping $18 billion.

Under his watch, CVS developed its Internet strategy. He also oversaw the drugstore chain’s distribution systems getting products from suppliers into its stores.

Analyst Eric Beder, with Ladenburg, Thalmann & Co. Inc., said it’s no surprise that Conaway is leaving.

“You need someone in there right now who’s going to be very well versed financially,” Beder said. “That’s not his skill set. He’s not a turnaround guy. He’s kind of a builder, and that’s not going to happen right now.”

As part of Conaway’s compensation package, Kmart is to forgive a $5 million loan it made to Conaway last year if he was fired without cause before a certain date, according to bankruptcy court filings. The agreement also called for him to receive $6.5 million on July 31, 2003, or sooner if he was fired.

Kmart’s stock was up more than 12 percent on the news, gaining 16 cents Monday to close at $1.45.