Rick Leto Resigns as Mervyns Chief Executive

Rick Leto resigned Monday afternoon as chief executive officer of Mervyns, the Hayward, Calif.-based promotionally priced department store chain.

Leto made the announcement to his staff at 5 p.m. PST Monday and expects to exit the company by the end of the week.

Charles Kurth, currently senior vice president and chief financial officer, is expected to be named interim ceo until Leto's permanent replacement is named.

"I have decided to leave Mervyns," Leto told DNR, WWD’s brother publication, in a telephone interview.

He stressed that when he joined the chain in December 2004, he only agreed to stay on until the end of 2007: "I made a three-year commitment and I thought I might stay a fourth year, but it's time for me to move on."

Leto said that he has accomplished "everything that I told them I would and so it's time to find someone else to move the company forward. It's a nice time to exit."

He said that he is planning to "take the winter off, go to Florida and spend time with my kids and wife, who I haven't seen very much of lately."

Of his professional plans for the future, Leto said, "I have some things going but I'm not ready to say anything more specific now."

A veteran of Macy’s and Galyan’s, Leto spent eight years with Kohl’s prior to joining Mervyns in 2004, when it was acquired from Target Corp. by an investment consortium led by Sun Capital Partners Inc., Cerberus Capital Management LP and Lubert-Adler/Klaff and Partners LP for $1.2 billion in cash.

Mervyns operates 177 stores in eight states. Since Leto joined, it’s closed over 80 underperforming stores, overhauled its systems and revamped the merchandising to be more relevant to a moderate-income customer. Leto said in an interview last week that business since back-to-school has been challenging and he was expecting a tough first half of 2008.

Click here for DNR's full story.