Thrifty’s President Resigns; Up to 100 Stores to Be Closed
Thrifty Corp.’s longtime president has resigned, and 50 to 100 of the company’s ailing drugstores and sporting goods outlets will be closed over the next two years.
The Los Angeles-based owner of Thrifty, Pacific Enterprises, also announced Wednesday that, as expected, it lost $229 million during its second quarter. The loss stemmed largely from a one-time accounting charge of $275 million that analysts said will translate into higher earnings for the energy and retailing company in future quarters.
Departing as president of Thrifty is Richard G. Eils, 52, the company’s president for 10 years and its chief executive since February. The company said Eils, who began his career with Thrifty 25 years ago as an industrial engineer, will “pursue other interests.”
He was replaced as president by Daniel Seigel, a lawyer who had no retailing experience before joining Thrifty in March as executive vice president and chief financial officer. Seigel started in Pacific Enterprises’ legal department in 1974, and worked his way up to president of the company’s alternative energy and leasing businesses before going to Thrifty.
The job of chief executive at Thrifty--whose seven chains include Thrifty, Thrifty Jr. and Big 5 sporting goods--was left vacant. The company said it is conducting a nationwide search for senior executives with retailing experience, but that no decision was made on whether it will fill the chief executive’s job.
Seigel, for at least the time being, will be in charge of Thrifty’s day-to-day operations, and Leonard H. Straus is continuing as the company’s chairman.
Thrifty’s 1,070 drugstores and sporting goods shops account for 29,000 of Pacific Enterprises’ 40,000 employees and close to half of its revenue, but last year brought in only one-fifth of its after-tax operating income. They are mainly in California, but also operate in various Western and Midwestern states.
The stores have been hurt by, among other things, price-slashing by such competitors as the Sav-On drugstore chain. Pacific Enterprises said it plans to close “marginal” stores among Thrifty’s retail chains as part of its effort to improve earnings.
No decision was announced on which stores will be closed. As many as 2,000 employees could be affected by the closings, but the company said efforts will be made to minimize dismissals by transferring workers to healthy stores.
Pacific Enterprises’ second-quarter loss resulted from a $100-million writedown of Thrifty’s assets and a $175-million writedown of the reserves of its Pacific Enterprises Oil unit. Analysts said the charge against the oil and gas business was essentially an accounting fluke linked to a temporary decline in energy prices. Now that those assets have been written down, however, it will preclude energy depletion charges in the future.
In trading on the New York Stock Exchange, the company’s stock climbed $1.125 to close at $39.75. Analysts attributed the gain to optimism about the impact of the Persian Gulf crisis on Pacific Enterprises’ oil and gas business.
They also cited hopes that the company’s big utility business, Southern California Gas Co., will benefit from a possible decline in interest rates. In addition, Pacific Enterprises bolstered the confidence of investors by announcing that its cash flow remains strong and can “readily accommodate” the company’s regular dividend payments.
Pacific Enterprises’ $229-million quarterly loss came on operating revenue that climbed 4% to $1.6 billion. The company earned $53 million in the year-ago quarter.
