Buying some food for Fido? How about a chew toy while you're here? It's not revolutionary retailing, but Timothy Kullman, the new CFO of PetsMart Inc., the $2.5 billion chain of pet superstores, says reformatting the company's store design–putting dog toys and accessories right by the dog food, for instance–has begun to pay off. The company is about midway through the process of renovating all 570 of its stores, which used to be organized by product, with pet food in one section and accessories in another. "So a customer would come in to buy dog food and very seldom would buy something else," Kullman says. Now, products are organized by species: Pet owners find all the products for their pet of choice in one place.
And for PetsMart's customers–what the company calls its "pet parents"–toys are a must. Kullman attributes the company's recent good numbers in part to its focus on pet parents–pet owners who are so devoted that they consider their pets members of the family. These customers provide PetsMart some protection against the weakening in consumer spending, says 46-year-old Kullman, who joined Phoenix-based PetsMart in June, because pet parents do not see spending on their "children" as discretionary.
While other retailers have posted mediocre results so far this year, PetsMart enjoyed a 12.1% increase in comparable store sales in the three months ended in April and an 11.4% increase in the three months ended in July. Its stock was trading above $17 in early September, up from $9.84 at the end of 2001. That rise compares with the S&P 500′s slight dip over the same time period. And this summer Standard & Poor's added PetsMart to its midcap index, the S&P 400, which increased interest in the company among Wall Street analysts and institutional investors.
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PetsMart also recently revamped its distribution system. That has meant "we have the product in the store when the customer wants it," Kullman says. PetsMart's effort to increase its sales of services, like grooming and training, is another plus, he adds, since services are "four to five times more profitable" than product sales.
Impressive, but PetsMart is going for Best in Show. "Our idea is to bring ourselves equal to best in breed retailers," Kullman says. PetsMart wants to strengthen its balance sheet, move toward an investment grade credit rating from its current Ba3/B+and get its earnings per share growth above 20%, Kullman says. The company also plans to accelerate new store construction after completing its store redesign in fall 2003. "We expect to grow square footage by about 8% for each of the next three years," he says. "That is going to be used to fuel mid-teens revenue growth."
Before joining PetsMart, Kullman served as executive vice president and CFO of Hagemeyer North American Holdings, a division of the Netherlands distribution company, and as CFO of Genuardi's Family Markets Inc., a supermarket chain based in Norristown, Pa.
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PNC Financial Services Group Inc., a $6.7 billion financial services company based in Pittsburgh, named William Demchak CFO and vice chairman. Demchak, 40, succeeds Robert Haunschild, 52, its CFO since 1994, who is leaving to pursue other interests, but will remain to assist with the transition. Demchak most recently served as the global head of structured finance and credit portfolio for J.P. Morgan Chase.
Xcel Energy Inc., a $14.8 billion natural gas company based in Minneapolis, named Richard C. Kelly as its CFO in addition to his current role as chief operating officer of Xcel's troubled power-generation subsidiary NRG Energy. Kelly, 55, replaces Edward J. McIntyre, who left to pursue other interests after 30 years at Xcel and a predecessor company, Northern States Power Co. Prior to the formation of Xcel, Kelly was CFO for one of its predecessor companies, NCE, and held a number of finance positions at one of NCE's predecessors, Public Service Co. of Colorado.
Whirlpool Corp., the $10.3 billion home appliance maker based in Benton Harbor, Mich., named R. Stephen Barrett Jr. CFO and executive vice president. Barrett succeeds Mark Brown, who was appointed senior vice president in charge of global strategic sourcing. Barrett, 49, has spent most of his career at Procter & Gamble Co., joining in 1978 and holding a series of increasingly senior financial positions. Most recently, he was vice president of finance for its global fabric and home care business.
Dynegy Inc., a $42.2 billion Houston-based energy company, restructured its finance leadership to split duties among three executives. Louis Dorey, 46, who was appointed CFO in June, was named executive vice president of finance, which will give him more scheduling flexibility to deal with a serious illness in his family. He will focus on financing transactions, treasury and managing relationships with lenders and rating agencies. Michael Mott, 42, Dynegy's controller, added the titles of chief accounting officer and senior vice president. Hugh Tarpley, 46, Dynegy's executive vice president of strategic investments, will lead a new corporate development department and will oversee business unit reviews, financial and strategic planning and investor relations.
Harry Beeth was appointed corporate controller and vice president of Xerox Corp., the $17 billion maker of office machines and copiers in Stamford, Conn. Beeth, 57, replaces Greg Tayler, who was named treasurer in November 2001. Like Xerox's CFO, Lawrence Zimmerman, Beeth retired from International Business Machines Corp., having spent 32 years in various management and finance positions. From 1998 until his retirement in 2000, he led the finance organization of IBM's server group.
Thomas Szkutak, a long-time General Electric Co. executive, was named CFO and senior vice president of Seattle-based Internet book seller Amazon.com, which had $3.1 billion in 2001 revenues. Szkutak, 41, succeeds Warren Jenson, who left Amazon in June to become chief financial and administrative officer of Electronic Arts. Szkutak spent more than 20 years at GE and most recently was CFO of GE Lighting.
ACE Ltd., a $6.7 billion insurance company based in Bermuda, named Ken Koreyva treasurer. Koreyva, 47, replaces Elizabeth Murphy, who left to take another job. Koreyva most recently was retained by Pennsylvania's insurance commissioner to oversee the rehabilitation and liquidation of Phico Insurance Co. Earlier he spent 10 years at MIIX Group, where his last position was president and CEO.
Malcolm McVay was named CFO of HealthSouth Corp., a $4.3 billion rehabilitative healthcare and outpatient surgery provider based in Birmingham, Ala., at the same time that HealthSouth announced a plan to spin off the surgery center unit into a separate company. McVay, 40, who had been HealthSouth's treasurer and executive vice president, succeeds Weston Smith, 41, who will be CFO of the surgery center company. McVay joined HealthSouth in September 1999 and was named treasurer in February 2000.
– Feng Zhen
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