End of a Family Fight

CORPORATIONS End of a Family Fight

Like a child torn by a parental custody fight, Genesco, the sprawling retail and apparel concern, rocked back and forth for years in a war for control between two strong-willed personalities: W. Maxey Jarman and his son Franklin. In the end both lost. Four years ago, Franklin, now 45, ousted his father as company head and set about stripping Genesco of unprofitable businesses that Maxey had acquired in an unsuccessful attempt to expand sales to $2 billion a year. (They are about half that now.) Then, last week, Franklin himself was bounced in a coup organized over the New Year's holiday by his two chief subordinates and four outside directors (Maxey, now 72 and no longer a director, apparently took no part).

Franklin remains chairman of the company that his grandfather, James Franklin Jarman, founded 52 years ago. But he was succeeded as president and chief executive by William Blackie, 72, a former executive vice president who agreed to come out of retirement and run the company temporarily while the ten directors search for a permanent chief. The board announced that Franklin Jarman would have only such duties as Blackie assigned to him, and Blackie said that he could not think of anything that he wanted Jarman to do.

Numbers Man. Franklin seems to have fallen victim to his own attempts to bring more scientific management to the diverse, largely fashion-oriented (Henri Bendel, Bonwit Teller) business. Jarman, a numbers man who carries an elaborate pocket calculator, lopped off several divisions, including San Remo men's suits and I. Miller women's shoes, and slashed 10,000 employees from the payroll. The surgery alienated the heads of many of Genesco's 78 operating divisions, who resented Jarman's lack of merchandising expertise. Some grumbled that Jarman "ran a fashion business as though it were a bank."

For a while, however, Jarman's ap proach seemed to work: in the fiscal year that ended last July, Genesco recorded a $16 million profit, v. a loss of $14.4 million the year before. But as staff morale plummeted and consumer spending flattened out, profits turned downward again and Genesco's creditors became worried about their loans (the company had to refinance $70 million in debt that fell due in November). Stockholders bridled when Jarman announced at the annual meeting in December that Genesco would pay them no dividends before 1978. Common shareholders have received nothing since 1973, and Genesco is behind in dividend payments on preferred stock. Shareholders also complained angrily that, while the company was paying no common dividends, Jarman's salary had been raised by $105,000 a year, to $285,000.

Management discontent and investor distrust came together over the New Year's weekend. Jarman's immediate subordinates, Chief Operations Officer Ralph Bowles and Chief Administrative Officer Larry Shelton, both board members, met with four outside directors --including two associated with institutions that have lent money to Genesco --at the Nashville home of Director David K. Wilson on Sunday night, Jan. 2. The six issued a call to the full board to meet in special session the next day at Genesco's Nashville headquarters. In a session that lasted more than ten hours, the board voted to strip Franklin Jarman of his executive responsibilities. Franklin, after a futile attempt to resist, voted philosophically for his own demotion; afterward, associates described him as being "in a state of shock." Who eventually may succeed him is impossible to guess now, but his temporary replacement, Blackie, has already earned at least a footnote in the company's history. He is the first Genesco chief executive ever whose name is not Jarman.

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