AMERICAN'S COUNCIL PURSUES CHANGE

ELLIOT ZWIEBACH

SALT LAKE CITY -- American Stores Co. here is molding its corporate hierarchy to match its new direction.

Recent realignments in management assignments and the decision earlier this year to have its top officers meet weekly as part of an Executive Council typify the chain's new approach as it moves from being a holding company to an operating company, according to American Stores' executives and analysts.

The council, which plans the company's overall strategic direction, is comprised of 10 top executives, with Victor L. Lund, American's chairman, president and chief executive officer, presiding but not an actual member.

Meredith C. Anderson, vice president of public, government and investor relations, told SN, "The council looks at major strategic issues and the whole process of formulating, defining and refining American Stores' strategies and then attempts to manage change to help us get to where we want to be. "In the past, American has been more narrow in its focus, but now we're being very proactive in managing change and helping move the company's strategic vision forward."

Council members and their titles, most of which were recently conferred, include the following:

David L. Maher, American's chief operating officer, who will provide guidance to other executives and ensure balance and consistency in the company's undertakings.

Martin A. Scholtens, chief operating officer of retail, whose

job it is to ensure that American achieves leverage, synergies and cross-fertilization from all its retail entities.

William J. Bolton, chief operating officer of markets, who is charged with balancing food and drug assets on a market region basis and seeking growth opportunities in new formats.

Robert Hermanns, chief operating officer of procurement, whose function is to devise unified national services and logistics to support Scholten's and Bolton's strategies as efficiently and rapidly as possible.

Hermanns also has ultimate responsibility for the Delta Group -- an amalgam of 120 operations and computer specialists that is reengineering American's systems into a nationally managed infrastructure that will tie together buying, merchandising, warehousing, distribution and inventory control.

Six other members of the Executive Council will supervise centralized administrative services. They are:

Kent T. Anderson, chief strategy officer.

Teresa Beck, chief financial officer.

James R. Clark, chief planning officer.

Kathleen E. McDermott, chief legal officer.

Stephen L. Mannschreck, chief human resources officer.

Francis J. Raucci, executive vice president and chief labor counsel.

According to Gary Giblen, managing director at Smith Barney, New York, the council provides American with the opportunity to "move outside the box" and develop more innovative approaches and solutions to new and existing challenges. "For a company like American, which grew through a series of acquisitions of chains with different cultures and different ways of doing things, a vehicle like the Executive Council is especially important because it allows the company to cross-fertilize best practices across all divisions and drive the process of upgrading inter-company information systems," Giblen said.

Lund outlined the company's new direction at last month's annual meeting, noting that "historically we have been organized into a half dozen or so operating entities, each of which has been largely autonomous. Each provided its own support operations, even if that resulted in duplication. Now we are breaking down those barriers and eliminating those inefficient duplications [and finding that] the efficiencies that can flow from national teamwork are powerful."

According to Giblen, the appointment of Bolton as chief operating officer of markets, exemplifies the process of cross-fertilization American is seeking to achieve.

"Bolton's job is to look at each store and find ways to maximize its return, whether that means converting it to a Super Saver, a drug store, a medical equipment store or a 'fresh' store -- something that wouldn't be practical if you had one executive in charge of supermarkets and another in charge of drug stores," he noted.

The Executive Council evolved last March from the Executive Working Party, a group formed at Lund's direction in 1993.

Jonathan Ziegler, a securities analyst with Salomon Bros., New York, said, "You need to be proactive in this industry today because Wal-Mart never sleeps.

"And now American, like others in the industry, is realizing that it has to take more proactive positions -- in areas like logistics, cost-cutting, working with vendors and new store concepts -- because it sees it's in a non-growth industry sector."

Chuck Cerankosky, a securities analyst with Hancock Institutional Equity Services, Cleveland, said the formation of the council and the accompanying changes in management titles and responsibilities "signifies the seriousness with which American is addressing cost-reduction efforts to streamline information systems, purchasing and store development, as well as the way in which the new management team will work together."