Cosmetic Center files for Chap. 11

2 top executives are replaced

Regan named CEO

April 17, 1999|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

The Cosmetic Center Inc., the struggling Columbia-based discount cosmetics retailer, said last night that it has filed for Chapter 11 bankruptcy protection and replaced two top executives, including its chief executive officer.

In a statement released shortly before 7 p.m., the company said Betsy Burton, president and chief executive officer, and Dwight Crawley, the chief financial officer, have resigned.

The new chief executive officer is Kevin Regan, described as a 23-year retail veteran who serves as a director with Pricewater-houseCoopers. Kemp Woolen, formerly controller of financial reporting, has been promoted to vice president and chief accounting officer.

Since her hiring about 10 months ago, Burton had refused to publicly discuss her plans for the chain, which by summer will close 26 Cosmetic Centers and 90 outlet stores that did not meet expectations. "She came into a horrible situation," said Mark Millman, president of Millman Search Group, a national retail-consulting firm based in Lutherville. "Her hands were tied. She wasn't able to do what she set out to do."

The company's financial troubles stemmed from a 1997 merger with Revlon Inc., which retail experts said interrupted the flow of goods and drained the company's profit. Burton, a noted turnaround specialist formerly of Supercuts Inc. and PIP Printing, was hired in June to make the company attractive to suitors after Revlon, the biggest U.S. maker of mass-market cosmetics, said it would sell its 85 percent majority stake.

Revlon sold its stake in Cosmetic Center in December to Prestige Holdings I, which is controlled by York Management Services Inc., a New Jersey-based investment and management company. Revlon took a loss of $32.7 million, or 64 cents per share, on the sale.

In addition to relinquishing the CEO job, Burton has resigned from the company's board, along with two other company directors, Thomas Brown and Robert Germano. Regan and Robert Ramsey, the company's senior vice president of merchandising and marketing, have been appointed to the board effective immediately. Ramsey, formerly with Drug Emporium and Total Beverage, will also serve as vice chairman, the company said.

The bankruptcy filing will enable the chain to reposition itself, the company said.

About 31 Cosmetic Centers, primarily in Maryland and Virginia, and 93 outlets in 27 states, will remain open. Three Maryland Cosmetic Center stores will close.

Pub Date: 4/17/99

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