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Stamped boldly across the cover of Lechters' 1994 annual report are the letters Re-. In the pages that follow, newly appointed CEO Steen Kanter and chairman Donald Jonas toss around words like reevaluate, rethink and remarkable to describe the major changes underway at the Harrison housewares retailer.
These days, however, top Lechters officials are using words like resigned and replaced.
On Jan. 11, nearly two years to the day after he joined the company, Lechters announced Kanter's resignation. Within weeks, the only visible sign of the CEO in the company's headquarters was his name on the mailing label of a Jan. 29 copy of Newsweek in the lobby. Jonas, who was Lechters' CEO for 19 years before Kanters arrival and who owns 24.4% of the company, is back in that position. CFO John Smolak describes Kanter's resignation as 'sudden and unexpected."
Kanter claims, however, that he did not resign. A U.S. District Court Judge in Philadelphia will have to decide whether Kanter jumped or was pushed. On Jan. 16, Kanter filed a $1.5 million lawsuit in which he claims Jonas "criticized" his performance and "humiliated him in front of the turnaround market group." Jonas then announced that he was "taking over many key day-to-day responsibilities from Mr. Kanter." According to the documents, two weeks later Kanter was offered a buyout by two board members, but refused. After the board met, he was no longer CEO. Both Kanter and the company declined to comment on the lawsuit.
The two years leading up to Kanter's exit are a tale of one man's attempt to pump life into an ailing company. When Kanter arrived at Lechters, the financial picture was bleak. When he left, the performance of the 645-store chain was still lackluster. The company posted a third-quarter loss of $921,000 compared with net income of $1.22 million a year earlier. Lechters' stock, which opened 1995 at $17.13, plummeted to $6.44...