Electronics retailer Circuit City Stores’ chief financial officer Michael Foss is the latest in a series of senior level executives at public companies leaving for portfolio companies of private equity firms.
Foss, 49, will become chief financial officer at Petco Animal Supplies, a pet supplies retailer that Texas Pacific Group and Leonard Green & Partners took private for $1.8 billion (€1.4 billion) cash in July 2006.
TPG has a history of nabbing top-level executives from the corporate world to help run portfolio companies. Mickey Drexler joined as CEO of apparel retailer J. Crew Stores from Ann Taylor Stores and Gap; J. Crew went public in July 2006. Greg Brenneman took Burger King public in May 2006, after previously turning around Continental Airlines and a PricewaterhouseCoopers consulting unit.
Foss leaves at the middle of a turnaround effort at Circuit City. In early February, the retailer announced plans to close stores and reorganise its merchandising team in order to improve its financial performance after suffering from price competition in flat-panel television sets.
“This represents the third departure of a senior executive in the past six months, and the second departure of a top-five executive in the past month,” said Matthew Fassler, analyst at Goldman Sachs, in a client note. “[Circuit City] chief executive officer Phil Schoonover’s hand-picked team is turning over faster than we would like to see in a turnaround situation.” Fassler notes that Foss is the longest tenured member of the senior management team at Circuit City.
Foss, who joined Circuit City as an executive vice president in 2003, leaves the company in April. He will remain on its board until its annual meeting in June.
TPG and Leonard Green first took Petco private in 2000 for $600 million, before taking it public in 2002 and selling their stakes two years later. Both private equity firms reportedly made a profit of $1.2 billion.
But Petco is now said to be faced with rising costs for new store openings and increasing competition from rival Petsmart.