Executive Briefings

Private Industry Turnaround Specialist Tries to Lead the Military PX Back to Financial Health

The Army and Air Force Exchange Service - widely known as the PX or the Exchange - is designed to provide everything a soldier might need or want, tax-free and often at a deep discount: uniforms, tactical gear, recreational sports equipment, vitamin supplements, electronics, furniture, booze, lawn ornaments. It serves 12.8 million customers in 50 states and more than 30 countries. In fiscal 2013 the PX had revenue of $8.3bn and a profit of $332m. About a third of that was reinvested in operations, and the rest - $208m - was plowed into the Pentagon's morale, welfare and recreation programs to provide services like playing fields and on-base Boy Scout troops.

In the past five years, the store has seen a steady decline in sales as troop levels have fallen, and it estimates that profits could tumble by two-thirds by 2017, to $100m. Now, as the U.S. winds down combat operations in Afghanistan, the Exchange is trying to reinvent itself for customers based at home. In 2012 it hired Tom Shull, its first civilian chief executive officer, a West Point graduate who led the luxury department store Barneys out of bankruptcy in 1999. He went on to run catalog company Hanover Direct and potato-chip maker Wise Foods before serving as the court-appointed chief restructuring officer for Fred Leighton, the upscale jeweler, during its 2009 bankruptcy proceedings.

Can he turn things around at the PX?

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In the past five years, the store has seen a steady decline in sales as troop levels have fallen, and it estimates that profits could tumble by two-thirds by 2017, to $100m. Now, as the U.S. winds down combat operations in Afghanistan, the Exchange is trying to reinvent itself for customers based at home. In 2012 it hired Tom Shull, its first civilian chief executive officer, a West Point graduate who led the luxury department store Barneys out of bankruptcy in 1999. He went on to run catalog company Hanover Direct and potato-chip maker Wise Foods before serving as the court-appointed chief restructuring officer for Fred Leighton, the upscale jeweler, during its 2009 bankruptcy proceedings.

Can he turn things around at the PX?

Read Full Article