ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, July 23, 1996 TAG: 9607230036
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
DATELINE: ELK GROVE VILLAGE, ILL.
SOURCE: Associated Press
Arthur Martinez walks down the aisles of Sears, Roebuck and Co.'s newest hardware store, hefting a shovel here, weighing a sack of nails there.
It might seem odd to find the chief executive of the nation's second-largest retailer on hand for something as mundane as the opening of hardware store No.112 in the Sears' chain. But no one who knows him is surprised.
Martinez is a hands-on guy, and one might speculate as he clutches a shovel that he's thinking about digging a grave for small hardware chains around the nation as Sears moves aggressively into the estimated $160 billion-a-year home improvement market.
Few doubt the new venture will run into serious trouble. Martinez is the affable but tough executive who brought Sears back from the brink of extinction, who turned an Edsel into a Rolls-Royce.
He's the fix-it man, as anyone acquainted with the retailer can tell you.
``He is, without a shadow of a doubt, the most able, imaginative, competent and creative retailing executive in the country today,'' raves industry analyst Kurt Barnard of Barnard's Retail Marketing Report.
``I wouldn't call him the Miracle Man, but he comes pretty close. Up until the time Martinez stepped in, I felt that Sears had maybe one or two more years, and that would be the end. He not only rescued it, not only saved it from demise, he turned it into one of the most formidable rivals in the retail marketplace.''
It's been a year since Martinez took over as chairman of Sears; he came to the company in 1992 from Saks Fifth Avenue. Sears had $35 billion in sales last year and is on pace for another record year.
In 1993, as head of the retail merchandising division under then-Sears chairman Edward Brennan, Martinez did away with the company's 101-year-old ``Big Book'' catalog, closed 113 stores and lopped off 50,000 jobs in the largest retailing restructuring in history. Sears refocused itself on retailing as it divested its insurance, real estate and financial services businesses.
Resentful workers called Martinez ``the man from Saks with the ax,'' but Wall Street and many industry analysts loved what they saw. The company's stock soared from about $15 a share when he joined Sears to a recent 52-week high of $53.871/2. The New York Stock Exchange issue closed Monday at $42.50, down $1.621/2.
``It's incredible to what extent Martinez has completely changed and transformed the company, both inside and out,'' said First Manhattan analyst Steven Schuster. ``It's extraordinarily difficult to find any fault with him. The guy is human, I guess, but he's come as close to perfection as you can imagine.''
The high regard also is evident elsewhere. When a department store chain is in financial trouble, Sears always figures prominently into speculation about a potential white-knight savior.
``Gratification is the single greatest emotion,'' Martinez said of the turnaround. ``It's been an exceptionally gratifying year that as a freestanding, independent company we've continued the kind of success we've enjoyed when we were a group inside a larger company.''
Martinez has been relentless in tightening Sears' focus and getting millions of Americans, particularly women shoppers who make up much of the retailer's clientele, to see what the company now calls its softer side.
Now he's aiming for more.
Sears is opening hundreds of off-the-mall hardware stores in shopping plazas and stand-alone locations in major cities, hoping to carve a $30 billion piece of the pie for itself.
``We will win,'' Martinez said flatly. ``Frankly, our target competition is the small hardware store that can't stand up to the power of this assortment and this brand.''
And the rapidly expanding Home Depot chain might look over its shoulder as well: Sears is working to snatch do-it-yourself business away from major chains with trademark 20,000-square-foot stores that offer everything from hammers and nails to power tools.
The retailer also is working to revamp its HomeLife furniture stores after disappointing results last year, aiming for a $90 billion market there.
The word ``growth'' rolls off Martinez' lips often as he looks at Sears' future.
``The mall stores are, sure, the engine of our company's growth; but as we look out two, five, seven, 10 years from now, a lot of the growth of the company has to come from formats that are not mall-based because mall-based shopping is a fundamentally mature sector,'' he said.
``Our challenge is to find new ventures to bring brand Sears and its family of brands to the consumer in convenient and easy-to-shop locations.''
The returns already have been good overall. Sears' revenues rose 5.8 percent last year, during what many consider one of the most difficult years in retailing history. Sales from stores open at least a year rose 6.8 percent, and the company's operating margins nearly quadrupled to 2.6 percent from 0.7 percent.
For the most recent quarter, Sears said its same-store sales rose 7.7 percent, while total sales rose 10.1 percent.
Martinez has cut costs and lifted Sears' profit margins while luring customers with lower prices. He said the days of employee cutbacks at the Hoffman Estate-based company are over - with aggressive expansion, thousands of new jobs are likely to be created.
New ventures also are likely. The company is examining acquisitions and other ways to bring its strong appliance and home electronic segments into off-the-mall stores.
``It's got to be a good fit, it's got to be something that is strategically complementary to what we're doing,'' Martinez said.
In the meantime, the executive is counting dollars as he looks ahead.
At the hardware store, he bought a hand-held fan for his trip to the Olympics in Atlanta, adding a few dollars to the company's coffers, then questioned the store manager about the nearest competition.
None in this town, the manager said.
``So you can make $6 [million] or $7 million this year, then?'' Martinez asked.
LENGTH: Long : 117 lines ILLUSTRATION: PHOTO: AP Once known as a corporate hatchet man, Sears CEOby CNBArthur Martinez is rebuilding. Sears is opening hundreds of hardware
stores in plazas and stand-alone sites, hoping to carve a $30
billion piece of the pie for itself. color.