Lynch's sudden Albertson's exit surprises many, raises questions

Drug Store News,  August 18, 2003  by Doug Desjardins

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BOISE, Idaho -- Albertson's president Peter Lynch stepped down last month after four years with the company. His sudden resignation surprised many in the industry and left many questions in its wake.

The nation's second-largest grocery chain announced Lynch's resignation in a July 24 press release that stated the 51-year-old executive "resigned is positions as president and chief operations officer to pursue other interests." Chief executive officer Larry Johnston issued a statement saying Albertson's appreciates his dedicated efforts and hard work on behalf of the company and wishes him the best in his future endeavors."

Johnston has assumed Lynch's duties, and, to date, the chain has not discussed plans to replace him. As always, the sudden departure of a high-ranking executive who leaves to pursue other interests raised speculation as to the reasons behind the exit.

"There's a big question mark there," noted Deutsche Bank analyst Edouard Aubin, who suggested Lynch was pushed aside. And several factors may have come into play, including Albertson's recent performance.

The retailer reduced its earnings estimates for the year from $2.08 to $2.13 to $1.70 to $1.75, with Johnston citing "a tougher economic and competitive environment than we anticipated in the first months of 2003." Lynch may have been tabbed to take the blame for the shortfall.

His rapid rise through the ranks at Albertson's also may have been a factor. The former executive at American Stores joined Albertson's when it bought American Stores in 1999. He was hired as executive vice president of operations and was appointed president and chief operating officer in 2000.

Lynch was a candidate for the top job at Albertson's when former chief executive officer Gary Michael retired in 2001, but the job went to Johnston, a former executive at General Electric. Since then, Johnston has steered the chain through a major restructuring that included closing hundreds of stores and exiting several major markets.

By most accounts, Johnston and Lynch appeared to get along well. They joked around, during a meeting with reporters in June and posed together for photos. But the pressure of the company not performing up to expectations may have created problems, some analysts have speculated.

Still, there's evidence that Lynch mmay have left on his own accord. According to a story in The Idaho Statesman, Lynch had never settled in Idaho and had been commuting to Boise from his homes in Chicago and on the East Coast.

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