Turnaround Artist Faces the Test of His Life: Ames Stores : Retailing: Hard-driving Stephen L. Pistner rescued Target and Montgomery Ward. But they weren’t in bankruptcy court proceedings.
They call him “Mr. Turnaround,” a wonder boy who rescues sinking retailers then moves on to the next hopeless case.
But as the new chief executive of Ames Department Stores Inc., Stephen L. Pistner faces his most formidable challenge yet: leading the nation’s fourth-largest retailer out of a Chapter 11 bankruptcy filing.
If he pulls it off, his reward could amount to a tidy $9 million--$1.5 million a year in salary for three years, plus incentives worth $4.5 million.
Pistner (pronounced pize-ner), a man known as much for his ego as for his retail savvy, says he is worth every penny.
“I know that I’m highly paid, and I know people can’t really relate to that, but for those of us who can save a $5-billion company, for those stockholders and banks, this is a bargain,” said the 58-year-old, his voice and face becoming animated.
Pistner has engineered remarkable recoveries at Target Stores and Montgomery Ward & Co., analysts said. There’s also the McCrory Corp. of New York, operator of a chain of variety stores, where he was credited with interjecting new merchandising ideas into an already successful formula.
Pistner’s taste for adventure extends to such off-hour hobbies as flying, sailing and white-water canoeing. His more refined interests include collecting art, ancient glass and antique cars.
He took the helm at Ames on April 30, five days after the retailer, listing $1.4 billion in liabilities and cut off by its major suppliers, filed for protection from creditors under Chapter 11 of federal bankruptcy law. Much of the chain’s troubles have been blamed on its $778-million acquisition of 392 Zayre stores in 1988.
Pistner’s first three months on the job have shown a true-to-form Pistner doing what he does best: mercilessly shedding unprofitable operations and replacing top managers with new blood.
He is closing 221 stores--a third of its 679--a move that will cut 18,000 workers and reduce the now-rambling Ames to a Northeast-corridor chain.
Pistner pioneered the concept of “power departments”--stores within stores that specialize in specific kinds of merchandise, such as clothing or major appliances.
For all his salesmanship, he has a reputation as a brash, impersonal manager--a style that has alienated both top brass and sales clerks.
At Ames, he has already named a “chairman’s shopper” to rove around Ames stores incognito, snitching on employees who are treating customers poorly.
“He’s in a hurry. He doesn’t have time or much tolerance for ignorance,” said Norman McMillan, a Chicago retail consultant who worked with Pistner at Target and Montgomery Ward.
Another consultant who has known Pistner for years said, “His attitude is, if you’re not with him, you’re against him, and he’ll trample right over you.”
Pistner’s roots in retailing go back to 1953, when he started as a salesman for a small electronics company in St. Paul, Minn. He worked his way up and eventually bought the company.
In 1970, he sold the business to Dayton Hudson Corp., the Minneapolis-based retailer. Three years later, Dayton Hudson picked Pistner to take over its Target stores, which had been a money loser for years.
Target’s profits soared as the chain became the first so-called upscale discounter. Its stores featured brand names and trendy interior designs to compete with department stores. Target is now the nation’s third-largest discounter, after K mart and Wal-Mart.
Pistner was named president and chief operating officer of Dayton Hudson in 1977. He left four years later to take on another daunting task: rescuing Montgomery Ward, a struggling unit of Mobil Oil Corp. Mobil had lost $600 million on the retailer in its 10 years as owner.
Under Pistner, Montgomery Ward closed 50 stores, upgraded the quality of the remaining 375 and focused on its more successful products.
Within two years, Montgomery Ward turned a $40 million profit, its first since 1979.
Pistner left Montgomery Ward in 1985 to become chairman of McCrory. He quit in 1988 for undisclosed reasons. Some analysts say that he and owner Meshulam Riklis--both forceful men with large egos--were unable to work together.
Pistner has never tackled a company in bankruptcy proceedings, and some analysts give him only a 50-50 chance of saving Ames.
“He’s highly regarded in the field, but the question is, is the situation so far gone that it would be impossible for any human being to fix this scrambled egg?” said Alan Millstein, a New York publisher of a monthly newsletter for retailers.
Pistner doesn’t share such doubts.
“I have rebuilt, reconstructed and redefined almost every retail business,” he said. “When there’s a problem, I know how to repair it.”
