User:MatthewSForner/sandbox/Arthur C. Martinez

Arthur C. Martinez

Arthur C. Martinez
Born	September 25, 1939 Brooklyn, New York
Nationality	American
Education	Harvard Business School (M.B.A.)
Alma mater	Polytechnic University (B.S.) now New York University Tandon School of Engineering
Occupation	Business executive
Title	Chairman and CEO of Sears
Term	1995 - 2000
Predecessor	Edward A. Brennan
Successor	Alan J. Lacy

Arthur C. Martinez (born September 25, 1939) is a business executive and a former Chairman and CEO of Sears, who served in this role from September 1995 to September 2000. He is best known as the person who tried to turn around Sears, Roebuck and Company (Co). Prior to joining Sears, Martinez held executive management positions in several companies, including International Paper, RCA and Saks Fifth Avenue..

Early Life

Arthur C. Martinez was the only child of Arthur F. Martinez and Agnes Caulfield Martinez. He was born on September 25, 1939, in Brooklyn, New York. His mother was an Irish immigrant who worked part-time as a department store clerk. His father was a seafood wholesaler. Martinez grew up in Brooklyn and attended local Catholic schools. He had a modest and religious upbringing and learned important life lessons, especially the value of hardwork and determination, from his parents.

As a teenager Martinez worked as a stock boy and was a math prodigy who graduated from high school at the age of 16. He then attended the Polytechnic University where he earned a B.S. in Mechanical Engineering in 1960. He also helped fund his education through involvement in Reserve Officers' Training Corps (ROTC). Upon graduation, he was commissioned as Second Lieutenant in the U.S. Army Corps of Engineers and was stationed in Stuttgart, Germany from 1961 to 1963. His time in the military taught him the importance of diversity, a value he still believes in. He financed his education with help from a small business he co-owned that published a magazine. He wrote the editorial content and his partner sold the ads.

Upon returning from military service, Martinez enrolled in Harvard Business School, where he graduated with a Master of Business Administration (M.B.A.) in 1965.

Career

Early Career

Martinez began his career working for Enjay Chemical Company, a division of Exon Mobil, after graduation from Harvard Business School in 1965. Wanting quicker career advancement, Martinez left in 1967 and joined International Paper, where he worked as a vice president of planning and oversaw a new ventures division. Martinez then joined Talley Industries, an aerospace and defense manufacturer in 1969 as the assistant to the president and a director handling mergers and acquisitions where he oversaw Talley’s relationship with Wall Street.

RCA Corporation

In 1970, Martinez joined RCA Corporation as one of three directors of business and financial planning and was then promoted to Chief financial officer (CFO) of RCA Records. In 1976, Martinez was promoted and became president of the international division.

Saks Fifth Avenue

In late 1979, Martinez accepted an offer to become senior vice president and chief financial officer of Saks Fifth Avenue, a high-end luxury retailer in New York. Saks was owned by BATUS Inc., the U.S. division of British American Tobacco. Martinez’s time at Saks Fifth Avenue was an exciting time of growth for the company, despite a national economic recession.

The BATUS business empire began to struggle in 1986 and sell-offs initiated by London were in the forecast. In a corporate restructuring, Martinez was offered to head the remaining BATUS retail properties headquartered in Louisville, Kentucky. The remaining properties included Saks Fifth Avenue, Marshall Field's, Ivey's, and Breuners Home Furnishings. Martinez took the job as CEO and moved to Louisville. In 1989, BATUS initiated a further restructuring which involved divestiture of all its retail holdings. During this time, Marshall Field's was sold to Dayton Hudson, Ivey's to Dillard's, and Breuners to a buyout group based in California. In 1990, Saks Fifth Avenue was sold to Investcorp, a buyout firm that also owned Tiffany & Co. Martinez was asked to return to Saks Fifth Avenue as Vice Chairman.

Sears, Roebuck & Company

Joining Sears

While vacationing in Maine, Martinez was seriously considering a job with Swiss-owned department store chain P.A. Bergner, which owned Bergner's in Milwaukee and Carson's in Chicago. His duties would be similar to those at Saks, with the primary goal of helping both Bergner's and Carson Pirie Scott emerge from bankruptcy. During this time, Martinez was contacted by Herb Mines, an executive headhunter hired by Sears, Roebuck and Co. to find a new executive to help Sears Merchandise Group and the entire flailing company. Martinez was reluctant to consider the offer with Sears due a verbal agreement to join Bergner. However, in a few short days, Sears CEO Edward A. Brennan landed the corporate Gulfstream III near where Martinez was staying and the two met together in the small pilots lounge to discuss the position in-depth. Brennan assured Martinez that he would have the authority and resources to make major changes at Sears. However, Martinez was not convinced. The next day, Mines called Martinez and shared that Brennan thought the meeting went very well. Despite this, Martinez declined, sharing there was just not enough time to make a change. This was followed by Brennan calling Martinez, imploring him to see things through as Sears needed him. Again, Martinez declined. Finally, after an intense phone call from Donald Rumsfeld, a member of the board, chair of the search committee, presidential advisor and cabinet member, and future United States Secretary of Defense, Martinez yielded. Rumsfeld had challenged him, reminding him that Sears was an American institution and that the nation needed his leadership. Following this call, Martinez told Brennan he would talk to the directors and seriously think about the opportunity.

In the following days, Martinez read what he could on Sears. He knew the business was struggling and needed immediate change but was unsure of their ability or preparation for such monumental change. With this in mind, Sears flew Martinez to Chicago to personally meet with Donald Rumsfeld and other senior directors. The following days found Martinez thinking back to these conversations and realizing that they had the will, resources, and commitment, and that the job was in Chicago, not Milwaukee. With the assurance of support from Brennan, Martinez accepted the professional challenge of a lifetime and took up the challenge to reinvent one of America's best known department stores.

The First 100 Days

In 1992, the year that Martinez joined Sears, the company had lost $3.9 billion with $3 billion of that amount coming from the merchandising department. "It would be presumptuous to say I knew exactly what I was going to do when I walked in the door, but it was pretty clear that dramatic action was called for. It was not a situation where incremental improvement was going to be sufficient," Martinez told Terry Savage of the Chicago Sun-Times. Within the first one hundred days in his new position, Martinez made some dramatic changes at Sears. The company had already divested many of its other businesses, such as brokerage and real estate, which allowed Martinez to focus on what he knew best, retail. His first major decision was to end the venerable Sears catalog, which had been in circulation for over 100 years. While it was a sentimental favorite among the Sears employees, the catalog was losing $1.5 billion Sears, Roebuck & Company Joining Sears [1][4] [1][4] [1][4] The First 100 Days annually. Additionally, Martinez closed 113 stores and laid off 50,000 people. Martinez quickly received two nicknames and was dubbed "the man who killed the catalog" and "the ax from Saks." The decision to lay off 50,000 people was not taken lightly, but Martinez was convinced that these tough decisions were necessary to save the company and keep the remaining 300,000 jobs.

Martinez presented his grand strategy and plan for the future of Sears to the Board in December 1992. His strategy included the following:

• We would focus on our core business wherever we could win and grow.
• We would identify the target customer and make Sears a compelling place to shop.
• We would become market driven in what we offered to our target customers.
• We would speed up the pace of cost reductions.
• We would develop a culture that would carry the company to a greater future.

Martinez focused on changing the corporate culture at Sears, which had contributed to the company's poor performance. Martinez aimed to make managers accountable for how well their particular areas performed. Some of the major internal culture changes included replacing the 29,000 page Sears rule book with a new and simpler version. Other major changes included investing in improving the company's infrastructure, particularly with respect to technology, and moving away from the "silo" approach to management. This thinking moved the company in a more centralized direction, where leaders would boost their skills as administrators, while continuing their crucial role as shopkeepers. As with any major change effort, some were enthusiastic and some were wedded to the old ways.

Continuing to press for a new set of values and behaviors, Martinez unveiled a new corporate mission, Sears: A Compelling Place to Work, Shop, and Invest. To insure that the mission was achieved, Martinez developed the Total Performance Indicator, TPI for short. It was designed to tell Sears where I stood on an ongoing basis with customers, employees, and investors. Martinez believes that the Total Performance Indicator was when the old Sears culture ended and where the new Sears culture began.

Finding The Softer Side of Sears

Sears had long been known as a “man’s store" given its heritage and strengths in automotive products and service, as well as tools and lawn and garden equipment. It was vital to determine if this was true, as it would guide the strategy. Through exhaustive research and interviews, it became clear that the woman in the American family was the decision maker for all things for home and family. However, product offering for her personal use were outdated, poorly presented and there was a complete absence of beauty products. Thus, it was necessary to build a credible apparel and accessories business. National brands were introduced, stores were renovated, presentation was upgraded, and a fully beauty business was built from the ground up (Circle of Beauty). The next step was to tell the customer about this change. After an intense competition between America’s leading advertising agencies, Young and Rubicam was chosen. From that partnership came the iconic “Softer Side of Sears” campaign. It was a clever invitation to the female customer to experience the new Sears without disparaging the “harder side.” Customers responded immediately and comparable store sales turned sharply positive. Over the succeeding years, apparel sales and profits continued to grow at industry leading rates.

Continued Growth

While the apparel business was surging, it was important to strengthen other key franchises. The most critical was the appliance business. It had unique value creating characteristics - merchandise margin, credit card profitability, and service and installation sales. Through partnerships with Whirlpool and General Electric, the vaunted Kenmore brand was reinvigorated. Over the 90's, this franchise was hugely successful and by the time of Martinez's retirement, it had an astonishing market share of 40%. Other innovations included the development and launch of a free-standing hardware store concept and a fully integrated home furnishing store called The Great Indoors. During this time Martinez was beginning to understand the potential power of the internet. Sears was the first large bricks-and-mortar chair to embrace e-commerce when it put its appliance business online in 1999. Through much of the 90s, Sears prospered and when Martinez retired at the end of 2000, Sears had just recorded the highest operating profit in its history.

Post-Sears

After retiring from Sears as Chairman and CEO in December 2000, Martinez embarked on a career of board leadership, in both the for-profit and non-profit sectors. He was already a member of the Boards of Directors of Ameritech and Amoco, which were bought by Southwestern Bell and British Petroleum, respectively. He joined the Board of Pepsico in 2001 and served there for 15 years, chairing a number of Committees. That same year he joined the board of International Flavors and Fragrances, and served that company for 14 years. He was Lead Independent Director for 10 of those years. He was a Director of Martha Stewart Living Omnimedia and Lead Independent Director. He was a Director of Liz Claiborne (later Kate Spade) from 2001 to 2015. In 2004, he joined the Board of ABN-Amro, the largest bank in the Netherlands, and as named Chairman in 2006. He was responsible for the sale of the bank to a consortium of European banks in 2007 for 70 Billion euros, the largest financial industry transaction in history at the time. He stepped down as Chair in 2010. In 2009, he was asked by the US Treasury to join the Board of AIG, following its bailout by the US Government. He stepped down in 2015. Also in 2009, he was named Chairman of HSN, Inc., as it went public and remained as Chair until 2017. In 2014, he became Executive Chairman of Abercrombie and Fitch and retired from that Board in 2018. He served as a member of the Federal Reserve Board of Chicago from 1994 to 2001 and was its Chairman from 1997 to 2001. He was a long-time member of The Business Council.

Martinez was equally devoted to non-profit causes. He was Board of Chair of Polytechnic University, his alma mater, from 1994 to 2002. He was a board member of the National Urban League from 1994 to 2002. He was Chair of the National Minority Supplier Development Council into the mid-90s. He was a trustee of Northwestern University and the Chicago Symphony and is today a Life Trustee of both. He was a Trustee of Northwestern Memorial Hospital and Chair of the Civil Committee of the Commercial Club of Chicago. He has been a Trustee of Greenwich Hospital for 18 years and has served as its Board Chair for three separate 3-year terms. He chaired the Board of the National Retail Federation. Today, he serves on the Board of the Norton Museum of Art (Palm Beach, Florida), Maine Coast Heritage Trust and Bigelow Laboratory for Ocean Services.

Honors

Martinez has received an honorary Doctor of Laws degree from Notre Dame University in 1997 and a Honorary Doctor of Engineering from Polytechnic University in 2004. He received Harvard Business School's Alumni Achievement Award, the school's highest honor, in 1998. He was named CEO of the Year in 1997 by Financial World magazine. He received the National Retail Federation's Gold Medal for excellence in retailing in 1996.

Personal

He married his wife, Elizabeth, in 1966. They have two children, Lauren and Gregory, and five grandchildren. Martinez and his wife live in Greenwich, CT, Hobe Sound, FL, and Northeast Harbor, ME.

External links

• www.example.com