April 1 1990 by Chief Executive
You can’t run a company by looking at a piece of paper while sitting in an ivory tower,” says Ladbroke Group‘s chairman and managing director, Cyril Stein. Stein favors a more hands-on approach when running the $4.75 billion U.K.-based conglomerate, most known for its recent acquisition of Hilton International (not to be confused with the U.S.-based Hilton Corp., which recently put itself up for sale). Since Ladbroke acquired Hilton International in 1987, profits have doubled.
One hotel was losing $300,000 a year on a disco. Now it’s a profitable conference room. The hotel business makes up 60 percent of total profits, but analysts predict Ladbroke’s greatest opportunity will come from the opening up of
Ladbroke strategically acquired racetracks in
“Five years from now, we should have half the states in the union. We have virtually no competitors in the
Ladbroke Property contributes 13 percent to group profits and DIY Retail, 12 percent. With interest spread between the
Stein’s first job after training for his accountancy degree was with Ladbroke in 1956. In 1966, he became chairman. One year later, the company went public. Early on he had
10 percent of the company, which cost him about £10,000. “If I had 10 percent of the company today, I’d be a very rich man.”
At 61, Stein has no plans for retirement. In fact, on a recent trip to the
WARREN E. MAIN
As the supermarket industry experienced LBO fever during the 1980s, Albertson‘s avoided the debt burden and dislocations affecting other chains. Chairman and CEO Warren E. McCain, 64, continued a steady growth policy that focused on strengthening the company.
Albertson’s avoided a takeover because of its stock price. “As long as we keep our earnings continually rising,” says McCain, “and command a multiple of 20 to 22 percent, it will be hard for an outside organization to make an offer that will be acceptable to our shareholders.”
McCain’s goal has been to expand in 17 western and southeastern states where 1989 sales topped $7 billion. McCain is not content to increase his territory in piecemeal fashion-from 1979 to 1989 Albertson’s bought 24 stores from competitors. “With our low debt position, we can grow faster [than the other chains],” he says.
Albertson’s current five-year plan calls for $1.2 billion in new store construction with an additional $236 million for extensive remodeling of existing stores. McCain’s philosophy? “You either grow or shrink. In order to keep the best people and give them opportunities, you must have a road map for growth.”
Analysts give Albertson’s high marks as a well-managed company. But they note that it has to face a labor challenge in the 1990s. “I feel that Albertson’s is an extremely well-run supermarket chain with excellent cost controls and superior executives,” says Ruth Ketler, formerly an analyst with Drexel Burnham Lambert in
Albertson’s corporate culture is not only about making money. It’s also about being a “people-oriented business,” according to McCain. But riding herd on 50,000 employees isn’t easy. As the teen population dwindles, where will the company find employees?
Some of the answers to employee labor questions will have to be answered by McCain’s successor. His retirement plans haven’t been made public. When he does step down, he assures that “the company will be in good hands.”
JOHN H. McCONNELL
John McConnell got his first taste of the steel business as a teen working in a steel mill in a small town in
In his first year, his five employees produced $342,000 in sales and the firm realized a net profit of $11,000. Today, as an intermediate steel processor,
As chairman and CEO, McConnell, 66, is positioning
McConnell is also interested in large companies that are market leaders. He recently joined forces with USX and with
“In today’s pricing environment,” he adds, “it is difficult to purchase companies that will contribute to earnings. Until circumstances change, we will devote capital to building new plants and growing internally.”
McConnell considers himself fortunate: with the help of the GI Bill, he was able to get a good education. That paid off. Today he can afford to relax at his
ROBERT K. MELTZER
These are times when a fur company CEO feels like hibernating. In fact, the head of the second largest company in the industry (Fur Vault) recently announced he intends to get out of fur entirely.
“It’s probably the only major apparel item that’s had such a tremendous decrease in price, ever.” That’s the view of Robert K. Meltzer, president and CEO of Chicago-based Evans, the world’s largest retail furrier.
Founded by Meltzer’s grandfather, the 61-year-old fur company was the first one to go public, in 1963. With 30 stores and leased fur departments in Garfinckel’s, May Company and Nordstrom, Evans is a nationwide barometer of the 30,000-member industry.
“The best thing you can have in any industry is stability of pricing,” says Meltzer. “Since the peak in 1987-88, prices have dropped as much as 40 percent.” The reason? According to Meltzer, the peak was mainly responsible. This is purely a commodity business,” he says. Mink provides 70 percent of the industry’s sales and when pelt prices surged, so did farm production-hugely.
Adding to the mink glut were two warm winters and accelerating anti-fur campaigns. Although European activists have apparently cut fur sales dramatically in the
“The anti-fur issue,” he explains, “is being played out in the media. The vast majority of the American people don’t truly believe that animals have the same rights as humans.”
Nevertheless, “People for the Ethical Treatment of Animals” claimed a big victory when another furrier, Antonovich, filed Chapter 11 in December.
Industry executives like Meltzer insist that such claims are grossly exaggerated, and point to increased sales (up 47 percent for Evans) during December’s cold snap. However, because of pricing, though unit sales went up, profits remained flat. In addition, Evans and the other big furriers are suffering the effects of optimistic expansion during the boom years. “I think the industry’s going to go through a trough for the next two or three years,” he predicts.
With sales of about $133 million in 1989, Meltzer’s firm will probably show less in 1990.
Residing in chilly
down, too, and the winters get even chillier, things may get better. But the activists will probably still be active.
As CEO of the Buda- pest-based Compudrug, Ferenc Darvas, 48, runs a company with an annual growth recently averaging more than 75 percent. Revenues in 1989 were about $3 million, with 30 percent from foreign trade.
Darvas is a specialist in expert systems-advanced computer software that incorporates artificial intelligence techniques-that rapidly predict the effects of substances and reactions in drug design, metabolism and toxicology.
Working with John W. Kiser III, a Washington, D.C.-based investor and East Bloc technology authority, Darvas’ Compudrug last year opened its first
Still, Darvas finds the
time,” he says, “but American high executive levels seem resistant to innovation. It’s been a painful experience.” Marketing was not a subject that was taught in
Paradoxically, in communist
Darvas, like most Hungarian entrepreneurs, is trying to raise hard currency investments to develop his business. “Development costs in
The transformation of Elizabeth Birman, head of
Birman made some mistakes. “It was wrong to finance only risky ventures,” she admits. But she made profitable decisions, too. An investment in a natural cosmetic called Helia-D has been highly successful in
In 1985, the fund was cut loose from the state and renamed Innofinance. Today, as an independent CEO, Birman examines risk very carefully and expects a 25 percent annual return until repaid. She spends most of her time seeking out new ventures. “My first question,” she explains, “is who will be the executive manager? I don’t trust financial projections; you can put anything on paper.”
With about $8 million of capital, Innofinance is a bright light in the financial gloom of
- Peter Lacey