Egghead’s Founder Picks Key Adviser as New Chief

Victor C. Alhadeff, founder and chairman of Egghead Discount Software, said Friday that he has turned over his day-to-day operational duties to a company director who was a key adviser in getting the concern started.

Named Egghead’s new president and chief executive was Stuart M. Sloan, one of the initial investors in the Issaquah, Wash.-based software retailer. As part of its management overhaul, the company also hired two other senior executives for newly created positions.

Alhadeff, who will retain the title of chairman, said he began searching for someone to take over as president about a year ago. He said he came to the conclusion that the company, as the nation’s largest independent software retailer, needed a “strong president” with more of an operational focus to realize its potential in the 1990s.

Alhadeff, 42, started the company in 1984 after the collapse of his multimillion-dollar oil and gas tax shelter business. The tax shelter lost millions for its investors when the bottom fell out of the energy market in the early 1980s.

Analysts credit Alhadeff with changing the rules of software retailing. He aggressively promoted software and removed some of the mystery of the product for consumers, in part by writing manuals in plain English and letting customers try out software at Egghead stores.

The company is expected to have 200 stores in operation and sales of nearly $380 million when its current fiscal year ends in March. However, increased competition from companies that have imitated Egghead’s approach have slowed its growth. In recent months, expansion costs have shrunk its profit margins.

To shore up the company’s management, Alhadeff hired two executives in addition to Sloan for new posts. Ronald A. Weinstein, another Egghead director and initial investor, was named executive vice president of merchandising. Matthew J. Griffin, a principal with Weinstein and Sloan in a Seattle-based private investment firm, was named executive vice president of corporate development.

Alhadeff said Sloan, Weinstein and Griffin had formed Sloan Capital Cos. with the idea of buying a company that they could manage. But, Alhadeff said, “They never bought anything and I never hired a president.”

Consequently, Alhadeff said, he told Sloan, a close friend for the past 15 years, that they could help each other. “I suggested to Stu that he could lend his skills at merchandising, and with my entrepreneurial background that we could take this thing forward.”

Sloan, 45, and Weinstein, 47, have long experience in merchandising. They developed Schucks Auto Supply into the largest automobile parts and accessories retailer in the Pacific Northwest before selling it to Pay n’ Sav in 1984. Sloan was president of Schucks and Weinstein was vice president of merchandising and advertising.

Sloan is currently chairman of Quality Food Centers, the largest independent supermarket chain in the Seattle area. He will continue in that post.

Griffin, 37, was previously a principal of Wright Runstad & Co., a developer of downtown office towers in the Pacific Northwest.

Analysts applauded the management changes. As they have in the past, analysts credited Alhadeff with properly acknowledging his weaknesses and compensating with a good staff staff. “He has brains to know what he doesn’t know,” said Charles R. Wolf, an analyst with First Boston in New York.

In over-the-counter trading Friday, Egghead closed at $11.375, up 37.5 cents. In its initial public offering last June, Egghead’s shares sold at $17 a share.