Gillette Names Nabisco Alum As CEO

Monday, January 22nd 2001, 12:00 am

By: News On 6

BOSTON (AP) â€” Gillette Co. named James M. Kilts chairman and chief executive officer Monday, turning to the man who engineered a dramatic turnaround at Nabisco to revive the struggling shaving products company.

Kilts, 52, becomes Gillette's fourth CEO in two years and its first ever pulled from outside the company. He rejuvenated Nabisco, the maker of Ritz crackers and Oreo cookies, paving the way for its $14.9 billion acquisition by Kraft Foods Inc., a Philip Morris subsidiary, announced last June.

Now Kilts will try to make his 30 years of food industry expertise work for Gillette, a consumer-goods company with an enviable portfolio of brands but a string of mostly disappointing earnings reports in recent years.

At Nabisco, Kilts gained a reputation as tough, effective leader â€” which no doubt explains his appeal to a Gillette board that made it clear when it fired then-CEO Michael Hawley in October that the company's problem wasn't its brands, but execution.

``He's a no-nonsense pragmatic leader. He tends to underpromise and try to overdeliver,'' said John McMillin, who knows Kilts and followed his work at Nabisco as a food industry analyst for Prudential Securities.'' ... He's a guy who can relate to people on the plant floor and in the executive suite.''

Kilts' record at Nabisco appealed to Gillette, analysts said Monday, in part because he managed the company's core brands well, showing a willingness to invest in marketing even when it meant cutting into earnings in the short-term.

``One of the first things he did was take earnings estimates down so he could jump-start internal growth,'' said Paine Webber analyst John O'Neill.

Strong brands but uninspired brand management could also describe Gillette, the analysts said.

``At the end of the day, Gillette's got the brands,'' said William Steele, an analyst at Banc of America Montgomery. ``And yet, they've kind of systematically missed numbers over the last couple of years.''

The company has already begun restructuring. Gillette announced last month it planned to eliminate 2,700 jobs, or about 8 percent of its work force, and close eight factories and 13 distribution centers as part of a plan to boost its profit growth.

Acting Chief Executive Officer Edward F. DeGraan, a 32-year veteran of the company who temporarily replaced Hawley, will continue as president and chief operating officer, positions to which he was elected in July.

''(DeGraan) knows the inner workings of Gillette cold,'' Steele said. ``It would seem to me he'll be a valuable resource for Mr. Kilts.''

Hawley had replaced Alfred M. Zeien in February 1999.

The company makes and sells a wide range of products, but is known most notably for its razors and toiletry products for both men and women. It also produces alkaline batteries, hair products, toothbrushes, and small household appliances.

Kilts' biggest challenge, McMillin said, will be reviving Gillette's Duracell brand, which it acquired for $7.82 billion in 1996 but which has suffered from slipping market share and sluggish sales lately.

``Duracell's lost a lot of market share, and correcting that will require better advertising, better product development, or even lower price levels,'' McMillin said.

The company is expected to announce fourth-quarter earnings on Friday.

Gillette shares were up 50 cents to $34.19 per share in late afternoon trading Monday on the New York Stock Exchange.