Word: genesco
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...world's largest producer and retailer of apparel, Nashville-based Genesco is a family business run with Tennessee savvy by W. (for Walton) Maxey Jarman and his son Franklin, 40. It was a proud day for Maxey when, at 65, he turned over the chairmanship to Franklin three years ago. Quipped Franklin then: "Dad is getting out at a good time...
Those were prophetic words in the light of Genesco's-and the Jarmans' -present situation. As is often the case when a strong-willed patriarch turns over power to his son, relations between the two have become strained. Maxey, an abstemious Southern Baptist who teaches Sunday school, had built Genesco into an empire of 105 operating divisions. Franklin, a member of what Nashville residents call their suburban "Belle Meade jet set," has been hard pressed to coordinate his father's motley acquisitions. At a six-hour board meeting last month the two argued with considerable heat...
...While Genesco's sales have risen to $1.3 billion, profits have dived from $36 million in 1968 to $16 million last year. Genesco stock has dropped from a high of $58 in 1968 to less than half that today. At a board meeting last week, officers announced a quarterly earnings loss of 5? per common share, down from a 51? gain for the same quarter last year. Alarmed, outside directors voted at the meeting to give the elder Jarman "added management responsibilities." The finance committee, of which he was still chairman, will be combined with the executive committee...
Several of Genesco's problems can be traced to Maxey's acquisitiveness in the 1960s. The firm expanded furiously, sometimes taking into the organization successful regional companies that did not fit well. Executives of some of the acquired firms may have seen Maxey coming. Genesco's standard takeover agreement allowed the sellers to keep the ownership of the buildings that they occupied and offered fat stock bonuses to men who could produce profit increases for Genesco in the first three years after acquisition. Some managers simply rewrote their building leases, temporarily cutting rents in order to raise...
...Genesco is also the victim of uncontrolled forces. It depends on the manufacture and retailing of fashion-sensitive clothing and shoes for 90% of its revenues. Its subsidiaries include Esquire Sportswear, Johnston & Murphy shoes and Formfit Rogers lingerie, as well as Henri Bendel, Bonwit Teller, I. Miller, S.H. Kress and Roos/Atkins. Lately, the fashion world has degenerated into volatile anarchy. The men's clothing industry has suffered especially, as young men have chucked tweeds and worsteds in favor of blue jeans and Army fatigues. One of Genesco's subsidiaries, Danté, Inc., which manufactures cuff links, has been...