Broadway's Make-Over : New CEO Remodels Stores and the Corporate Culture


Carter Hawley Hale shareholders were expecting to see a change when they gathered a year ago for their annual meeting at Pasadena's Ritz-Carlton Huntington Hotel.

After all, the Los Angeles-based retailer--operator of the Broadway department store chain--had recently emerged from a painful bankruptcy reorganization and was ready to introduce David L. Dworkin, the new chief executive who had just taken the helm from Philip Hawley, who held top company positions for 20 years.

The change was easy to see. The suave Hawley had been known for his natty and expensive attire, but Dworkin attended the meeting dressed in a sports jacket, casual slacks and a denim shirt.

Today, when shareholders gather in Los Angeles for the 1994 annual meeting, they will be seeing more than just a change in executive fashion. Dworkin has directed a face lift of the Broadway's once-dowdy stores, eliminated some redundant business procedures and is trying to engender a casual but creative corporate culture that encourages employees to dress down and speak up.

When Dworkin took Carter Hawley's top job in March of last year, he inherited a company that was struggling. The company went on to lose $95.9 million for the year ended Jan. 19, and sales for that 12-month period dropped to $2.09 billion, down from $2.14 billion the previous year.

But sales are now slowly improving under Dworkin. Same-store sales--revenue from stores open at least a year--rose 4.7% for the 13 weeks ended April 30 over the same period a year ago.

Dworkin has developed merchandising programs designed to be more responsive to the demands of consumers. For ideas, he has cast a wide net inside the company--soliciting suggestions from sales clerks as well as executives. To encourage such communication, he has eliminated formality and symbols of hierarchy.

For example, Dworkin has a meeting table in his Los Angeles office, but no desk.

"The desk," Dworkin said, "is sometimes an artificial symbol of power, and I'm trying to remove symbols that stand in the way of communication. I want to be as accessible as possible. We want to encourage an open dialogue in the kind of informal environment that encourages associates to share ideas."

Dworkin likes the word empower .

"We want to support and encourage people to take risks," he said. "This approach could be considered leadership as opposed to management. Empowerment is the solution to managing in a multicultural environment."

Dworkin will wear a tie at business meetings with outsiders, but he is an open-collar, blue-jeans-wearing executive at headquarters.

"As laid-back as I am, I'm very intense about results," Dworkin said. "With empowerment comes responsibility. The key to good management oversight is measuring the most important operations."

Early in his tenure, Dworkin concluded that there was excess staffing and redundant activity in the company's administrative operations. He eliminated about 800 positions at headquarters--leaving a main office of about 2,000 people.

However, there have been no cutbacks in staff at the company's stores, where Dworkin is trying to boost morale and the level of service. He meets at least once a week with employees at one of the company's stores, holds monthly interactive satellite broadcasts to stores and encourages employees to send him suggestions via computer or the company newsletter.

One employee, Elizabeth Groff, an assistant buyer in cosmetics, suggested that department sales managers be assigned to act as customer sales managers to be responsible for the atmosphere in the store and for driving the day's business.

Management responded by rewriting the job description of department sales managers--the 15 to 35 employees in each store who supervise sales clerks. Previously, sales managers were not required to spend a specific amount of time on the sales floor. Now they are expected to spend about 75% of their time on the floor gauging customer service.

In a bid to get more input from store managers, Dworkin also eliminated seven regional vice president positions and replaced them with hubs--14 brainstorm groups each composed of five to seven store managers who meet regularly to discuss ways to improve store operations.

"Hub leaders are in the trenches and understand the business, and they are part of the policy-making team," Dworkin said.

Change will be a top agenda item at Carter Hawley's annual meeting today, and shareholders are expected to approve a Dworkin initiative to change the corporate name from Carter Hawley Hale Stores to Broadway Stores Inc.

Dworkin says the name change will allow the retailer to link its corporate identity more closely to its store operations. Carter Hawley operates 52 Broadway, 22 Emporium and nine Weinstocks stores in five states.

However, the proposed change is also considered symbolic.

"The company wants to change the name to demonstrate that there has been a change in the corporate culture," said Thomas Friedberg, an analyst at San Francisco-based Genesis Merchant Group. "They're trying to show that this is a business with new management and a new style."

Some analysts question whether Dworkin can create enough change to make Carter Hawley a financial success in the Southland's increasingly fierce retail environment. Discount stores have been snatching market share from department stores--making it difficult for chains such as Carter Hawley to rebound, said Kurt Barnard, a New York-based retail economist.

"Dworkin has his work cut out for him," Barnard said. "He's making all the right moves, but the jury is still out. The question is, does he have enough time and financing to succeed?"

Dworkin's mission, Barnard said, is complicated by a troubling retail trend: lackluster consumer interest in new fashion. Flagging apparel sales and the rise of discount chains are a double whammy for many chains, he said.

"We are seeing a tough year ahead for most apparel-based retailers, especially department stores," Barnard said. "Carter Hawley Hale will continue to feel the impact of consumer reluctance to spend, because the public is more value-oriented and they perceive department stores as being higher-priced."

Responding to company surveys confirming that consumers want more high-quality products at lower prices, Carter Hawley has reduced the number of sales events in favor of lower everyday prices on more items.

The company is also developing marketing plans to attract more African American, Latino and Asian American shoppers, said Elayne Garofolo, head of marketing and sales promotion and a key member of the Dworkin team. Carter Hawley now produces Spanish-language television commercials.

The company hopes that a new store look and new products will lure more shoppers. It recently began to renovate 16 Broadway stores in California, Arizona and Nevada and plans to renovate 18 more stores next year.

Under the renovation plan, more space will be provided for more profitable products--such as apparel, shoes and cosmetics--and less will go to slower-selling items such as electronics and furniture. The company will also change fixtures, product signs and lighting in a bid to brighten and beautify its stores.

"The design changes are way overdue," said Doug Hope, a Los Angeles native and publisher of the Atlanta-based Display & Design Ideas magazine. "The company was in trouble partly because the stores looked stodgy and old-fashioned."

Renovations have already been completed at Broadway stores in Canoga Park and Panorama City, two earthquake-damaged facilities that recently reopened. The Canoga Park store reopened Saturday, and sales that day were nearly double the level of the store's previous one-day record--a positive sign for the remodeling effort, Dworkin said.

The company is also introducing new products. A Taste of California--a line of housewares that includes boldly colored plates, cups and table settings--will arrive in September. The retailer will also introduce a new line of casual clothing for men and women early next year.

Dworkin's Carter Hawley Hale

Carter Hawley Hale Stores stock has climbed in value since the company emerged from Chapter 11 bankruptcy protection in October, 1992, though it has started to dip again recently. Some retail industry analysts say the stock's gain is due in part to changes made by David Dworkin, the company's chief executive since March, 1993. Monthly closes, except latest: Thursday: $9.375

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