Word: maxey
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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...
...order to persuade his reluctant son Franklin to join the family firm, W. Maxey Jarman once threatened to cut off his inheritance. Even after Franklin, now 41, became chairman of Nashville-headquartered Genesco Inc. in 1969, father-son squabbling continued; in 1972 the Genesco board trimmed Franklin Jarman's authority by giving his father "added management responsibilities," but company troubles mounted and Franklin was restored to full command. Last week the younger Jarman displayed his authority by announcing that he would shrink the size of the company that Maxey built...
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...
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...
When it comes to making the most of a rough situation, Genesco's directors evidently feel that father knows best. Though the younger Jarman remains Genesco chairman, the elder will be in charge. At least one Genesco director believes that Maxey will use his restored position as a steppingstone to the Tennessee governorship in 1974. He tried for that office in 1970 but finished second in the Republican primary to Winfield Dunn, the current Governor. Genesco directors appear willing to keep Maxey on until the company is out of its slump. In a firm that depends on strong retail...