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EXECUTIVES: Profitable Oedipus

4 minute read

It was the stuff of a corporate soap opera, created by Norman Lear (Mary Hartman, Mary Hartman) in collaboration with Sophocles (Oedipus Rex). A crusty entrepreneur single-mindedly builds his obscure shoe company into a billion-dollar conglomerate. He turns it over to his son. The young executive discovers that without drastic reorganization the whole empire could topple. His father fiercely disagrees. Finally, the company’s board gives the younger man the power to dismantle much of the corporate structure his father had put together. While the old man watches bitterly from the sidelines, the young executive sells marginal stores and unprofitable ventures, taking heavy losses; for the first time, the company goes into the red. Eventually, the radical surgery is over and the company begins to turn a profit again. As the curtain falls, the two men grope back toward friendship.

Failing Fortunes. That saga is the true story of Genesco Inc., the footwear, apparel and retail giant that W. Maxey Jarman built in Nashville, Tenn. In 1969 Jarman, then 65, turned over the chairmanship to his brash, M.I.T.-educated son Franklin, but retained a firm grip on the corporate purse strings by remaining head of the finance committee. To many, Frank Jarman’s ascendancy amounted to rank nepotism—a suspicion that seemed justified when, in 1972, Genesco sales began a steady decline. In 1973 Genesco reported a $52.9 million loss, the first in its history; two years later there was another deficit of $14.3 million. The company suspended dividends in 1973. Wall Street analysts predicted that when $50 million in long-term debts became due in November 1976, Genesco would default and that Frank Jarman would be ousted.

Instead, Genesco has made a strong comeback. Through the first nine months of the fiscal year ending June 30, the company racked up profits of $14.9 million. Sales were up 3%, to $864 million. In February Genesco was able to market a $70 million bond issue that will enable it to get past the November deadline for repaying much of its long-term debt. Says Jarman, 44, a former naval reserve pilot and hot-air balloon enthusiast who salts his conversation with aviation lingo: “We’re committed to takeoff now.”

Making Genesco airworthy again required a sharp reversal of the relentless acquisition policy pursued by the elder Jarman, who bought up companies large and small. Some of the acquisitions —most notably the S.H. Kress chain, bought for $65 million in 1963, and a bevy of foreign textile and clothing makers—turned out to be clunkers. By early 1973 the situation had become so serious that Frank. Jarman staged a palace revolt.

Flying Divots. He forced through the company’s board a reorganization plan that named him Genesco’s first chief executive officer. A year later, Maxey Jarman retired from the board; although he visited the Genesco headquarters almost daily to chat with friends, he and his son hardly spoke. Meanwhile, Frank shut down 177 marginal Kress stores, sold such subsidiaries as San Remo men’s suits and I. Miller women’s shoes, slashed more than 10,000 employees from the payroll and installed a new management team. “There were a lot of people around here who didn’t work,” Franklin Jarman told TIME Correspondent Jack White. “They thought Thursday afternoons were for golf and that if you got to be an executive vice president both Wednesday and Thursday were for golf. Well, I don’t play golf, and a lot of people who had fairly comfortable berths were rudely shaken up and tossed overboard.”

Jarman keeps minutely detailed figures that allow him to know instantly what sales have been at the Bonwit Teller cosmetics counter or which of Genesco’s 85 subsidiaries can best make use of a new infusion of capital. Genesco is also embarking on a store-opening program for its profitable Johnston and Murphy and Jarman shoes.

Franklin Jarman remains unsatisfied: he is anxious to resume dividend payments. But one Genesco stockholder who seems pleased by developments is none other than Maxey Jarman. Not long ago, he sent his son a copy of a book on airplanes, inscribed with a kind personal note. In return, Frank Jarman sent him a copy of Futurologist Herman Kahn’s optimistic book The Next 200 Years. Says Franklin Jarman: “Time heals everything.” Profits help too.

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