Kmart loses marketing chief as DraftFCB ad contract end nears

Kmart loses marketing chief as DraftFCB ad contract end nears

Steve’s breakdown: We are predicting this account will be changing hands in the new year. Will there be a review? Not sure but Sears Holdings has really got to get its act together fast.

HOFFMAN ESTATES, IL: Kmart is searching for a new marketing chief just a few months before its advertising contract with DraftFCB is set to expire.

Mark Snyder, chief marketing officer, and Terry Brophey, vice-president of integrated marketing communications, left the discount retailing subsidiary of Hoffman Estates-based Sears Holdings Corp. last month, Ms. Brophey confirmed. Of her own departure, she said, it was “time for a change.” Mr. Snyder, who joined Kmart in 2008 after 20 years in the hotel industry, couldn’t be reached.

Their exits don’t bode well for advertising agency-of-record DraftFCB, according to several executives close to Kmart. These executives said Mr. Snyder and Ms. Brophey had championed DraftFCB’s Chicago office. Without them, the ad account’s fate will be left to others who haven’t been as personally invested in retaining that relationship.

Kmart has created a committee to handle Mr. Snyder’s duties for now and the committee is reviewing Kmart’s contract with DraftFCB, which is set to expire Jan. 31, one person with knowledge of the situation said.

Already, Kmart has moved advertising work to a rival agency. Last spring, Kmart retained DraftFCB as lead strategic shop following an agency review, but it awarded Minneapolis-based agency Peterson Milla Hooks ad duties for its highly visible apparel and home merchandise businesses. Peterson Milla Hooks helped redefine Minneapolis-based Target Corp. as cheap chic.

DraftFCB’s spokesman did not comment on what may happen with the Kmart account, saying, “We’re proud of our ongoing relationship with Kmart and all that we continue to accomplish together.”

An executive close to Kmart said Pat Dermody, vice-president of marketing services and a former president of integrated marketing at DDB Chicago, is a candidate to replace Mr. Snyder. DDB long has handled advertising for J. C. Penney Co., which is based in Plano, Texas.

A Kmart spokesman confirmed the executive departures. “We are in the process of searching for a successor to Mark Snyder,” he said. He referred questions about the advertising relationships to another spokesman who said DraftFCB remains Kmart’s lead strategic agency. Neither would comment on the contract or committee.

DraftFCB can’t afford to lose another big client. Household-products maker S. C. Johnson & Son Inc. of Racine, Wis., which had been the Chicago office’s largest client, bolted in late July.

For the six-month period ended July 30, Kmart sales at stores open more than a year were down 0.8% and revenue fell by $110 million to $7.1 billion from the year-earlier period, according to Sears Holdings. The company said revenue fell because fewer stores were operating while comparable stores sales fell in pharmacy, lawn and garden and apparel. Six-month operating profit totaled $5 million, down from $78 million a year earlier.

In fiscal year 2010, Kmart sales at stores open more than a year rose 0.7%, including a 2.5% gain in the fourth quarter thanks to higher sales of apparel, footwear and its private label Smart Sense grocery brands. In the third quarter of 2009, the company achieved its first positive comparable sales quarter since 2005 and only the second time since 2001.

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