Kmart Makes Branding Pro Its New Chief

Kmart Makes Branding Pro Its New Chief

Veteran fast-food restaurant executive Aylwin Lewis has replaced Julian Day as CEO of Kmart Holding Corp. Lewis’ appointment makes him one of six African Americans who currently head a Fortune 500 corporation and one of eight who have ever held the position.

Though some analysts and observers have called it a surprising move, Edward S. Lampert, chairman of Kmart’s board, who owns 52.6% of its stock, says the company has been consistent in its strategy to pull itself out of bankruptcy and stabilize its finances in an effort to revive and strengthen the retail chain as a competitive brand.

Since emerging from bankruptcy, Kmart’s stock performance has exceeded expectations. The company’s stock has climbed to a 52-week high of $91.48 from a low of $22.41. The company has posted escalating profits for fiscal 2005, earning $1.54 per share for its fiscal second quarter. Day, a hard-line finance executive who successfully steered Kmart through Chapter 11, resigned less than 18 months after the company came out of bankruptcy. Of his predecessor, Lewis says he is “very appreciative of the work [Day] has done. The company is financially very stable. And obviously we’re cash-flow positive. Those things are all a very good platform to take it to the next level.”

Lampert and the Kmart board believe Lewis, 50, an executive with a strong reputation for brand expansion and team building, is their man. “I did not know him previously,” offers Lampert, “but I certainly knew his reputation.” Neither would respond to specifics that, with Lewis on board, Kmart may become a multi-brand company or aggressively seek acquisition opportunities. “We have cited acquisitions as one of the potential activities,” Lampert offers.

Originally from Houston, Lewis cut his teeth in the fast-food restaurant business. His first job out of college was as a district manager of operations for Jack in the Box. His last 13 years have been with YUM! Brands Inc., the world’s largest restaurant company with brands that include KFC, Pizza Hut, and Taco Bell. There, Lewis revived the Pizza Hut brand and executed the company’s global operating platform and restaurant information systems. Before joining Kmart, he served as YUM!’s president, COO, and chief multi-branding officer. YUM! generates more than $8 billion in annual revenues.

Although many analysts believe that Lewis is professionally equipped to handle his new position, there has been some industry rumbling that Lewis may be out of his element. And although Lewis feels quite capable of the undertaking, he does acknowledge a learning curve. “Leadership skills, communication skills, culture-building skills — those are very transferable. [I’ve] got a lot of tools I can bring to help energize the group at Kmart. Really understanding brand and customers and how [to] build brands directly transfer over to this retail space,” explains Lewis, who also sits on the boards of Halliburton and Disney. “Where I have to do a ton of learning is on the merchandising side. That is going to be my biggest challenge. If you mess up, obviously the cycle time is very long