PEOPLE : John M. Lillie, Chief of Lucky, to Step Down : Sets Sights on Bay Area After Firm’s Turnaround

John M. Lillie, the Lucky Stores chief who staved off one corporate raider then last year secured a sweet takeover price from the owner of rival Alpha Beta supermarkets, said Monday that he is stepping down April 30 as chairman and chief executive of the two chains.

Lillie, 52, added that he hopes to remain in the Bay Area and run a major company.

His successor will be Larry Del Santo, 55, who has been president of Lucky since 1986 and chief operating officer since 1987.

Industry observers had speculated that Lillie would leave once American Stores, the owner of Lucky and Alpha Beta, received permission from an appellate court to merge the two operations under the Lucky banner. On March 31, the company got the green light to integrate the chains, although California Atty. Gen. John Van de Kamp has vowed to continue his effort to block the merger on the grounds that it will harm consumers by raising grocery prices.

In a statement, Jonathan L. Scott, American Stores’ vice chairman and chief executive, said the appellate court’s ruling that the merger could proceed meant that Lillie “has accomplished the objectives he set for himself on behalf of Lucky, and wishes to move on to pursue new opportunities and challenges.”

Range of Experience

Lillie grew up near Pasadena and has master’s degrees in engineering and business administration from Stanford University.

Highly regarded on Wall Street for having overseen Lucky’s successful turnaround, he has experience in a wide array of industries in addition to food retailing, including forest products, printing and bulk chemicals. Previously, he was an executive at Boise Cascade and Leslie Salt Co., in Newark, Calif.

In a telephone interview Monday from Lucky’s headquarters in the Northern California town of Dublin, Lillie said he hopes to become head of a major company. “Ideally, I will find a company that can be managed from the Bay Area,” Lillie said. “I don’t feel industry-constrained.”

Although rumors have swirled for weeks that he would leave Lucky-Alpha Beta, Lillie said he has not yet received any formal offers. “I started to network a little bit, but I’ve really tried to limit the amount of discussion till now,” he said.

Soon after American Stores’ $2.5-billion purchase of Lucky went through last year, industry observers speculated that Lillie might succeed L. S. Skaggs, the 65-year-old chairman and chief executive of American Stores. Instead, however, after Skaggs’ retirement as chief executive was announced, the company named Scott, 58, to that post. Skaggs is expected to remain as chairman for at least four years.

In 1986, Lillie won kudos on Wall Street for helping Lucky successfully dodge corporate takeover artist Asher B. Edelman. Lillie oversaw a dramatic restructuring in which Lucky sold its money-losing Gemco membership discount stores, spun off or sold its other non-food retailing operations and bought back $575 million of stock.

By concentrating on its core food business and a low-price strategy, Lucky soon boosted profits. But it also attracted the attention of American Stores, which launched a $1.74-billion bid for the company in March, 1988, and prompted a bidding war. By the time the dust settled, American Stores had agreed to pay a hefty $2.5 billion.

As a result, Lillie “is going out as a hero,” said John B. Kosecoff, a supermarket analyst with the First Manhattan investment house in New York.

Kosecoff also praised Del Santo as a “very approachable” hands-on manager who came up through the ranks. The analyst noted that Del Santo has a major challenge ahead to meld the divergent Lucky and Alpha Beta cultures.

Career at Vons

Del Santo, the father of 12, joined Lucky in 1984. Before becoming president, he served as executive vice president and senior vice president for Lucky’s general merchandise, automotive and fabric operations.

He began his retailing career with Vons Grocery after his graduation from the University of San Francisco in 1957. In 1973, he became president and chief executive of Vons. When Household International bought Vons in 1976, he was appointed senior vice president and later executive vice president of that company’s merchandising arm.

Lillie said Del Santo’s duties will encompass those of president as well as chairman and chief executive.

As for his plans, Lillie, who runs 25 to 30 miles a week to stay in shape, figures he will spend a couple of months evaluating options and relaxing and playing golf with his 16-year-old son in Idaho, where he owns a home. But if a good offer comes along, he noted, “I will be opportunistic.”