CEO Madsen to retire at REI
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Madsen, who guided the Kent-based co-op from its first annual loss in 2000 to record sales and profit last year, said he's retiring because "there's a lot of things I want to do, and what better time to leave this company."
He will stay in his post until REI's next annual meeting March 28, 2005, when he will be replaced by Sally Jewell, the co-op's chief operating officer.
"The most important thing he did with the company is he helped it focus," said Michael Hodgson, publisher of SNEWS, an online outdoor-industry trade journal based in Grass Valley, Calif.
When Madsen took over for Wally Smith in 2000, Hodgson said, REI "had its fingers in a lot of pies" as it simultaneously tried to bulk up its Web site and expand into Japan. Those ventures contributed to an $11.4 million annual loss, REI's first in more than six decades of business.
Under Madsen in 2001, REI turned a profit of $7.5 million as it boosted sales at U.S. stores; closed its unprofitable store in Machida City, Japan; sold its stakes in former subsidiaries Mountain Safety Research and Arc'teryx; and laid off employees in Kent and Japan.
Last year, profit swelled to $19.1 million on sales of $805.3 million as the co-op opened new stores in seven cities. REI's online investment has paid off: Direct sales, which include online and catalog purchases, rose 12.2 percent last year, outpacing the companywide increase of 9.5 percent.
"(Madsen) took the company from a company that was doing well but bleeding ... to a company that you've got every community in the U.S. pleading for one if they don't already have one," Hodgson said.
The 70-store chain is adding six stores in 2004 and will move its Lynnwood store to Alderwood Mall in the fall. In the past month, it has unveiled plans to open second stores in Houston and Austin, Texas.
Madsen, an avid cyclist, skier and mountain climber, said there's no end to the list of adventures he'd like to pursue, from hiking Africa's Mount Kilimanjaro to serving on community boards to spending more time with his 8-year-old granddaughter. This weekend, he'll tackle Mount Rainier with a group of friends.
"I'm still young enough that I can go out and have a good time and enjoy the hard work I've put in here," said Madsen, 55.
His career with the co-op started at age 17, when he took a job stocking shelves at REI's store on Capitol Hill. The job helped pay his way through Seattle Pacific University, where he earned a degree in mechanical engineering. Aside from three years in the Army in the U.S. and Germany in the early 1970s, Madsen has spent his entire working career at REI. He was chief operating officer for 13 years and has been CEO for four.
"I'm proud of the way this team pulled together during a very trying year in 2000, when we had a lot of things going against us," Madsen said.
REI's failed expansion to Japan was a setback, but "we did the right thing and exited gracefully," he said.
Since 2000, the co-op has championed the concept of multichannel retailing, installing in-store computer kiosks and allowing customers to pick up Internet orders at stores to avoid shipping charges.
Under Madsen, Hodgson said, REI accelerated its evolution from a homespun co-op to a disciplined national retailer with rising clout.
"It's not the fuzzy teddy-bear company that it used to be," Hodgson said. "They're a very powerful company and a well-oiled retail machine. It really depends on your perspective whether that's good or bad. I would definitely say REI is extremely healthy and well-positioned."
Jewell, 48, has been an REI director since 1996 and took over for Madsen as chief operating officer in 2000. She is a former president of Washington Mutual's Commercial Banking Group and serves on the University of Washington Board of Regents.
Jewell said REI will continue to focus on multichannel retailing. She described future projects such as an online inventory database, which will allow customers to see if an item is in stock at a certain store, and online "gear lists" that would let customers list their needs for upcoming outdoor trips.
"We don't see any end in sight for the potential there," Jewell said.
REI Chairman Bill Britt said he doesn't anticipate much of a shakeup when Jewell takes the helm next year.
"We're transitioning from one talented, energetic CEO to another," he said. "I really don't expect the company to skip a beat."
Jake Batsell: 206-464-2718 or jbatsell@seattletimes.com
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