Carter Hawley Chief to Retire : Retailing: Philip M. Hawley tells of plans a day after store chain emerges from bankruptcy. Search begins for a new merchant prince.

Philip M. Hawley, who helped build Carter Hawley Hale Stores into the West’s biggest department store chain but also presided over its near-collapse under a load of debt, said Friday that he plans to retire as chairman and chief executive, effective Jan. 31.

Hawley, the patrician son of an Oregon paper mill operator, announced his departure just a day after the Los Angeles-based parent of the Broadway emerged from the protective arms of federal bankruptcy court.

Carter Hawley announced no successor to its 67-year-old chairman, who will remain a director. Company executives and industry analysts declined to speculate. But that person will lead a reorganized company still facing daunting business problems. Most prominent is the challenge of turning around an ailing retailer dependent upon California consumers skittish about a steady stream of job layoffs and a poor economy.

However, Hawley, who will help with the search for his replacement, said in an interview that his successor will inherit a reorganization plan designed for a tough economy.

“The economy will be difficult for some time--perhaps 12 to 24 months,” he said. “But we’ll have a (store) modernization program and organizational changes in place and those are changes that will work for us in 1993. We’ll have a competitive edge in 1993.”

Hawley said he began to think about retirement last week as he put the final touches on the plan, which includes stronger financing and a new marketing strategy.

Hawley said he made the final decision Thursday, considering both his age and the need for new leadership to implement the plan.

“The most important task was to steer the company and emerge from Chapter 11,” he said. “Now, the most important task for this company is get into place a long-term management team that can lead the next five to 10 years. . . . I’m not severing (my) relationship with the company. I’m changing my role. I feel very good about this. I’m upbeat because it’s the right decision at the right time.”

Sam Zell, chairman of the Zell/Chilmark Fund, the Chicago-based investment group that became the principal owner of the reorganized Carter Hawley, said he agreed with Hawley’s decision.

“Phil wanted to ensure we handled the transition correctly,” Zell said. “This is the perfect time for a change. It’s the natural point to find someone to help set the next vision and implement changes.”

Hawley, who began his career in 1958 as a Broadway woman’s apparel buyer, has been severely criticized over the years for some of his visions for the company.

He became chief executive in 1977 and began an ambitious expansion, but the company showed lackluster profit during that period. Named chairman in 1983, he successfully fought a 1984 takeover bid by the Limited Inc.

But in fending off a combined offer from the Limited and Edward J. DeBartolo Corp. in 1986, Hawley set the stage for the company’s flight to bankruptcy court.

As part of a 1987 restructuring designed to escape the second takeover bid, management took on a heavy debt burden and put a 45% stake of the company in an employee stock ownership plan. Employees would eventually suffer heavy losses.

The restructuring also spun off Neiman Marcus, Bergdorf Goodman and Contempo Casuals to General Cinema Corp., a Boston beverage bottler and theater owner that had helped Carter Hawley beat back the 1984 takeover attempt by the Limited.

Burdened by debt and hurt by weak industrywide sales, Carter Hawley was forced into bankruptcy protection in February, 1991.

Under the terms of the reorganization, Zell/Chilmark obtained 75% of Carter Hawley in exchange for assuming one-third of the firm’s debt and an investment of $50 million.

In Friday’s interview, Hawley said his legacy would not be clear for some time. “You won’t be able to write that (legacy) for at least two or three years because we’ll have to see how the company performs,” he said.

What Hawley has left is “the rubble of what he thought was going to be his Taj Mahal,” said Alan Millstein, New York retailing analyst and newsletter publisher. “But it has turned out to be an empty paper bag for the employees and the shareholders, many of whom were employees.”

At this point, Hawley deserves credit and blame, said industry analyst Walter Loeb of New York-based Loeb Associates.

“There were a lot of mistakes, but Hawley wasn’t responsible for all the problems,” Loeb said. “Hawley’s had a distinguished career, but it’s time to turn the reins over to new leadership. It’s only appropriate that he maintain a position on the board.”

Since the bankruptcy filing, Hawley has engineered a corporate consolidation--for example, merging the purchasing operations of the various store divisions and cutting costs.

Peter J. Solomon, chairman of Peter J. Solomon Co., a New York investment banking firm that has advised Carter Hawley, predicted further consolidation.

“The department store still has to define itself,” Solomon said. “It’s a real challenge for the ‘90s.”

Carter Hawley has an “enormous advantage,” Solomon said, because of its prime locations in Southern California, “but they have to get people to go there, and that is the challenge.”

Hawley said he would be heading toward retirement with 500,000 shares in stock options. Disclosure statements from the company’s reorganization plan show that Hawley earned $750,000 in the firm’s most recent fiscal year.

A pension benefits table in that disclosure statement indicates that Hawley will receive a pension of at least $350,000 per year. And, as a member of the board, Hawley will receive $22,000 per year.

Times staff writers Nancy Rivera Brooks, Stuart Silverstein, Martha Groves, Stacy Wong and Otto Strong contributed to this story.