Retailer Is Likely to Look Outside for a New CEO

Carter Hawley Hale Stores and its biggest shareholder, the Zell/Chilmark Fund investment partnership of Chicago, will probably go outside the company to find a replacement for retiring Chairman and Chief Executive Philip M. Hawley, analysts said Friday.

There is certainly plenty of talent available, they say, given the number of top executives let go in the retail industry’s restructuring in recent years.

But it will require a skillful, resourceful manager capable of steering Carter Hawley, the parent of Broadway department stores, back from bankruptcy to profitability in a difficult economy.

“They’re going to need someone who is a combination of Samson and Nostradamus--somebody who can hold the thing together and at the same time prognosticate what’s going to happen,” said Alan Millstein, a New York retailing analyst. Zell/Chilmark “will have to hire a top-flight financial manager and merchant prince.”

“I’m sure the headhunters must be salivating because they’re going to pay a top price,” said Millstein, who also publishes the Fashion Network Report newsletter. Hawley was paid $750,000 last year.

A prepared statement released by Carter Hawley said that the 67-year-old Hawley will retire on Jan. 31 and he will serve on the search committee for his successor. It made no mention of H. Michael Hecht, 52, who was promoted to president of Carter Hawley early last year.

Hecht, who has been chairman and chief executive of the Broadway since 1986, is well thought of in the industry but carries the baggage of 17 years with Carter Hawley, many of those troubled years for the retailer.

“Michael Hecht is highly experienced,” Millstein said. “He’s very well regarded on the merchandising side.” But, he added, “the question is now whether they want to bring somebody in to shake and bake the upper management, whether they want to bring in a new broom.”

Analyst Walter Loeb of Loeb Associates in New York also believes that the new chief executive will come from outside the Los Angeles retail company, but considers Sam Zell, the head of Zell/Chilmark, a possible successor as chairman.

“The next (Carter Hawley) chief executive has to be someone with chain store experience--someone who can handle the hostile economic environment,” he said. “The company needs a strong merchandiser as chief executive.

“As for the chairman’s position, Sam Zell may want that position. Zell may want to be involved as a decision-maker. He will not be a passive investor.”

The new chief executive will take over a firm that just this week emerged from Chapter 11 bankruptcy protection. The company’s reorganization plan calls for remodeling its stores and revamping its merchandise--both aimed at focusing on a younger customer.

But whoever moves into Hawley’s office will have to contend with the weak state of the economy.

“So much depends on the California economy,” said Karen J. Sack, an analyst who follows Carter Hawley for Standard & Poor’s. Among retailers, “the sense seems to be that it’s not getting any worse, it’s bottomed out, but that’s not great either” for retailers looking for sales growth anytime soon, she said.

“Obviously, they need a strong person at the helm and somebody that Zell/Chilmark is comfortable with,” Sack said. “But you really need a strong economy to turn it around.”

“It’s a resuscitated chain in a very troubled economic climate, and retailers are very sensitive to consumer whims as far as spending is concerned,” Millstein said. “The first profits are a long way over the rainbow.”

Times staff writer George White contributed to this story.