Robert G. Miller arrived at his new job as head of the struggling store chain to find debt mounting, employee morale sinking, stock prices plunging and competitors elbowing in right and left.
Miller, reputedly one of the best executives in retail, wavered a half-year before taking the job.
That was nearly a decade ago, when Miller became chief executive officer of Fred Meyer Inc., then a Portland, Ore.-based food and apparel super-center chain. He is credited with reversing the chain's fortunes and positioning it for an acquisition last year by Kroger Co., the food retailing giant. After that, he thought he would retire.
Never did he think that soon at another chain, he'd be asked for a repeat performance. It's no wonder Miller is having flashbacks these days at Rite Aid Corp.
As chief executive officer of Rite Aid since December, Miller, 56, is facing even bigger hurdles in trying to turn a troubled company around. At the nation's third-largest drugstore chain, Miller found a host of problems. But financial and management turmoil last year -- which included the ouster of former CEO Martin Grass and the resignation of Rite Aid's longtime auditor, KPMG International -- left Miller with much more on his plate.
To start, Miller and his management team have had to untangle an accounting mess left by previous management, which is the subject of a Securities and Exchange Commission investigation. He has had to persuade lenders and merchandise vendors to give the chain another chance. And he has had to try to win back shoppers driven away by high prices and out-of-stock merchandise.
On July 11, the retailer, based in Camp Hill, Pa., restated profits by $1 billion lower for two years and reported a $1 billion loss for the year that ended in February. The restatements cut into retained earnings by $1.6 billion from February 1999 levels.
In his first at-length interview last week, Miller appeared upbeat about the chain's future. He believes past problems stemmed from uncontrolled growth.
He said sales are improving and should improve dramatically next year. With financial restatements and refinancing complete, "Now we can work on running good stores. We're feeling good about our ability to get there."
Industry experts say his team may have what it takes.
At Fred Meyer, "The results were nothing short of phenomenal, given the tremendous competition from Wal-Mart and expansion of Thrifty Payless, Safeway and Target," said Burt Flickinger III, managing director of retail consultant Reach Marketing. "Bob Miller and [President] Mary Sammons are two of the most capable and talented executives in all channels of retailing. It's going to be a very challenging turnaround, but this current team is going to lead Rite Aid back to being one of the more successful major retailers."
At Fred Meyer and before that at Albertson's Inc., Miller built a reputation for attracting and retaining the best and brightest retail managers, for motivating employees, driving sales, knowing the ins and outs of mergers and acquisitions and relating to everyone from cashiers to bank lenders in a direct, down-to-earth style.
"If you'd had a successful career, the last thing you'd want to do is take on Rite Aid," said Saul Fox, chief executive officer of Fox Paine and Co., a merchant banking firm. But Fox wasn't surprised the job went to the man he and other members of a search committee had wooed in 1991 to be the new chief executive of Fred Meyer.
"The guy can't sit still," Fox said. "He has to climb the next higher mountain. He sees what the end should be, and he just makes a straight line."
He just goes through walls. If you want to be successful, stay in his wake and follow him."
Analysts say it is too soon to tell how effective the new team will be.
"He is definitely saying all the right things," said Glenn Curtis, an equity analyst with Worldlyinvestor.com in New York. "He came out and said he is not focusing on the stock price, but trying to get everything in order, and next year will be a better year.
"It's going to be a long time until people trust the numbers again. Consistent same-store improvement will be the ultimate judge."
Miller, the son of a restaurant chef and an engineer who worked on the DC-8 aircraft -- that was his mother -- started in retail in high school. He sorted returnable soda bottles at All American Market in Orange County, Calif., where he grew up. The part-time job turned into a career; All American became Albertson's Inc., where he first managed the liquor department and rose to the No. 3 executive spot. He and his wife, Sharon, and three sons moved all over the country as Miller got one promotion after another.
At Albertson's, he built a reputation as a visionary, said Sam Duncan, who also worked for the supermarket chain. Duncan followed Miller to Fred Meyer and became president and chief executive of Ralph's Supermarkets, the largest grocery chain in Southern California and now part of Kroger.