The company that outfits flight attendants with their uniforms, rents clothing to workers across North America and has done so from its Twin Cities headquarters for more than 100 years kicked out its CEO on Friday, naming one of its own executives to the post, effective immediately.
"The board came to a point of view that it was time for a fresh leadership perspective," said Doug Milroy, the new CEO of G&K Services Inc., based in Minnetonka. "Our performance wasn't where we wanted it to be."
Milroy said the company recorded revenues of $1 billion last year, but its growth and profit levels were below its two main competitors in the $7 billion North American uniform rental business.
G&K shares rose 84 cents on the news, or 3.6 percent, to close Friday at $24.52.
Ousted was former CEO and former board member Richard L. Marcantonio, who takes a $2.9 million severance package. In a prepared statement issued Friday, G&K said Marcantonio was leaving "to pursue other opportunities."
Milroy was an executive at Ecolab Inc. of St. Paul before joining G&K in 2006. Before assuming his new role, he had served as G&K's president for direct purchase and business development. Lenny Pippin, a G&K director who was CEO of Schwan Food Co. in Marshall, Minn., from 1999 to 2008, was named chairman of the board.
Milroy told analysts in a conference call Friday morning that he was committed to the team already in place, signaling that other changes to the executive leadership were unlikely.
"There's nobody here who's satisfied with our company's recent performance," he said.
The company was founded in the Twin Cities in 1902. It has 9,000 employees in the United States and Europe. G&K rents and sells uniforms and work clothing, including high-visibility vests for road construction crews, restaurant kitchen uniforms made out of Biosmart, a fabric that kills germs, and flame-resistant clothing.
The economic malaise has hit the company's 175,000 customers hard, prompting layoffs that have led them to buy fewer uniforms. G&K recently nabbed a major new client in Northwest Airlines when it merged with Delta.
The first three months of this year saw G&K outfit 11,000 flight attendants with one of 60 uniform choices in some 30 countries, said G&K spokesman Shayn Carlson.
Last month, G&K reported a third-quarter loss of $86.3 million after the company took noncash charges of $94.4 million for write-downs of goodwill and other assets. The company said the write-downs were primarily a result of the company's declining share price, which in March had fallen by more than half from its 52-week high in September.
The company's revenue was down 8 percent for the quarter and 4.3 percent for the nine months ended March 28.
In January, G&K said it was cutting 340 jobs and eliminating 120 open positions because of declining demand and the weakening economy.
"We haven't been terribly disappointed in the performance given the tough economy," said Mark L. Henneman, of Mairs & Power, the St. Paul-based fund that owns 788,896 shares of G&K.
Matt McKinney • 612-673-7329