SYRACUSE, N.Y. -- Penn Traffic Co. here said last week it has hired Phillip E. Hawkins as its new president and chief executive officer.
His mission, according to one industry observer, will be "to ignite Penn Traffic's top line."
Hawkins, now senior vice president of store operations at Vons Cos., Arcadia, Calif., will join Penn Traffic sometime in early April. He will also be elected to the company's board of directors.
Hawkins succeeds John T. Dixon, who resigned from Penn Traffic in September for personal reasons.
Penn Traffic operates 265 stores in Pennsylvania, upstate New York, Ohio and West Virginia, under the names P&C Foods, Big Bear Plus, Insalaco Markets, Quality Markets, Riverside Markets and Bi-Lo Markets.
Sales for the year ended Feb. 1 were $3.3 billion, a decline of 6.8% off a slightly larger store base in 1995, while same-store sales fell 3.4%. The company reported a net loss of $41.4 million for the year, compared with a $79.6 million loss in the prior year.
In an interview with SN last week, Hawkins said his biggest challenge will be "to get sales back again." Asked how he plans to go about it, Hawkins replied, "My 29 years in the industry and everything I've seen and learned in merchandising, operations and marketing techniques will help drive sales."
He declined to discuss specifics.
"The worst thing you can do is go into an organization with preconceived notions," he said. "I need to understand what's going on once I get there and then fine-tune the things Penn Traffic is doing."
Although observers have predicted that Gary D. Hirsch, Penn Traffic's chairman, would make most of the decisions, regardless of whom he selected as Penn Traffic's new president, Hawkins said, "Gary has made it very clear that I'll be responsible for all day-to-day operations."
Asked whether he plans to install any new personnel once he assumes his new position, Hawkins told SN, "Obviously I will look at the personnel situation. But I don't want to make any changes just for the sake of making changes."
He said he was interested in the Penn Traffic job "because it's been a lifetime dream to be able to run a company."
Hirsch said last week Hawkins is "exactly what our company needs -- a proven leader in store operations, merchandising and marketing, experienced in meeting the challenge of improving sales and reducing costs.
"Our board expects Phil to take full responsibility for day-to-day operations from day one," he said.
Industry observers said Hawkins' primary challenge will be to reverse the declining sales trend that has plagued Penn Traffic for approximately 18 months.
"The company needs to develop a strategy that will bring more people into the stores to buy a wider array of higher-margin perishables," Bob Lupo, a high-yield securities analyst with BA Securities, Chicago, told SN last week. "If Hawkins can bring that focus to Penn Traffic, then it will be a very positive move for the company in the long run."
Howard Goldberg, a high-yield analyst with Smith Barney, New York, said Penn Traffic has needed "someone who can ignite the top line -- someone who can make sense out of what's already transpired there and figure out creative ways to get the most out of the programs that have already been implemented."
Those programs, including perishables upgrades and improvements to in-store grocery promotions, "are well-intended efforts, and they should be repaying benefits, but they have not been," Goldberg said. "The fact the company has found an experienced operations guy who's adept at store-level programs tells me Penn Traffic is serious about giving Hawkins a major say in what goes on."
Ted Bernstein, a high-yield analyst with Grantchester Securities, New York, said he is concerned about whether Hawkins will have enough time to get things moving in the right direction. "His job is tough because it's like turning around an aircraft carrier -- it takes a lot of time to do it."
Complicating Penn Traffic's situation, Bernstein said, is pressure from the banks to achieve certain performance levels, which get progressively tougher as time passes.
"The question is, will there be enough time to turn things around before Penn Traffic runs afoul of the bank covenants again, and if that happens, will they be amended again?" Bernstein added.
Hawkins began his career at Vons in 1968 while he was attending college. He was a store manager from 1979 until 1982, then became product supervisor for deli, dairy and liquor in 1982, product supervisor for produce and service deli in 1983 and a district manager in 1984. After holding several executive-level posts in the '80s and '90s, he was named senior vice-president of store operations in 1994.
