For nearly two years, Laura Sen has been CEO of BJ's Wholesale Club, a Fortune 500 company where sales are up and shareholders are seeing their portfolios grow. But just when she’s getting started, is the company going to be sold out from under her?
When Laura Sen reported for her first day of work at BJ’s Wholesale Club four years ago, she used the back door of the corporate headquarters, walked past the executive suite she would soon inhabit and toward the cafeteria where, behind closed doors, about 150 managers were seated, assembly style, waiting for the mystery announcement they’d been called together to hear.
Sen hadn’t been inside the Natick offices for four years. But she was no stranger to this place: She had worked at BJ’s for 14 years, rising to the rank of executive vice president and becoming one of two internal candidates for CEO back in 2002. In the end, she wasn’t chosen, and six months later was unceremoniously fired by the man who was. Mike Wedge’s tenure as CEO of BJ’s – the chain of 192 retail stores known as wholesale clubs because members pay to join and items are sold in large quantities – was marked by a series of promising yet ultimately unsuccessful initiatives that led to disappointment in store aisles and on Wall Street. It was no surprise when he left in 2006.
Chairman of the board Herb Zarkin took over as interim CEO, and one of the first things he did was ask Sen to come back. He kept it a secret until two weeks later, when Sen walked through the cafeteria doors. When she did, Zarkin says, the refrain “Laura’s back, Laura’s back” could be heard rippling through the group as heads swung around to Sen’s familiar figure – slim frame, pageboy hair, and broad smile – at the back of the room. When Zarkin announced that Sen was once again executive vice president of merchandising and logistics, the room, filled with people who would now answer to her, erupted in applause. As she walked through the company’s labyrinthine halls that day, she recalls, people came up to her in tears to tell her how happy they were that she was back. “I was totally blown away. Other than the days my two children were born and the day I got married, it was the most incredible day of my life,” Sen says.
Within two years, however, her story had morphed from a touching homecoming to an impressive corporate comeback. The BJ’s team didn’t know it, but Zarkin had not only promised Sen she’d get her job back, he’d promised her that eventually she’d have his.
In 2008, she was promoted to president and chief operating officer and assumed responsibility for running the company. In 2009, she became CEO. Sen, who is 54, is a member of a tiny group of women who are Fortune 500 company CEOs. But being a woman is the least of what has made her unusual. It’s Sen’s management style that sets her apart: She has flattened out the company’s traditionally top-down way of doing business, spent an unheard-of amount of time on the floors of BJ’s stores, given everyone from rank-and-file wage workers to those at the home office an unprecedented level of input and responsibility in the running of the business, and made herself accessible to and supportive of her suppliers and employees alike.
But now Laura Sen’s career may be heading for another twist. Wall Street is abuzz with speculation that BJ’s could be taken private by an equity investment firm in the coming months. If it does, Sen could wind up guiding BJ’s through what could be its greatest transformation yet. Or she could find herself once again out of a job.
You can tell you’ve crossed the threshold into BJ’s executive suite by the way the stiff gray industrial carpet turns to a red plush cushion under your feet and deep brown wood replaces bland, neutral walls. What has marked Sen’s tenure at BJ’s, however, is how little time she actually spends there. It’s not just that Sen from time to time eats in the cafeteria with the rest of the employees or visits their offices to talk to them. She spends fully 20 percent of her time in stores, where she shows up unannounced to talk to the managers, get feedback from workers, say hello to everyone, and snoop into customers’ shopping carts. It’s the part of her job she likes best.
“I don’t learn anything at my desk,” Sen says, laughing, as she walks through the aisles of BJ’s in Waltham in November. “Well, I learn a lot at my desk, but this is what we do” – she looks around at the store – “this is where our business happens.” As she makes her way through the club, staff, or “team members” in BJ’s parlance, go out of their way to come over and greet her. One even calls her Laura.
For a chief executive to spend this much time in stores is something that retailing experts say was common in bygone eras but is unheard of now that the industry is dominated by outsized chains. It is a massive allocation of her time, and Sen is a “throwback in terms of knowing that shoppers, department heads, and people working the floor can provide her with the best knowledge and the highest number of opportunities to capitalize on it,” says Burt Flickinger III of the New York-based research firm Strategic Resource Group. “That is why she is so successful. Most of her competitors tend to spend their time behind their desks in corporate headquarters or spend excessive time with Wall Street analysts, bankers, or investors. Laura is fully focused on the front lines.”
In addition to having a positive impact on the bottom line, spending that much time in the stores helps employee morale, says Paula Rosenblum, manager of RSR, a retail technology research firm in Miami. “The widespread perception in the retail business is that the home office has no idea what goes on in the stores, and they just keep sending them more work regardless of how much time they have,” says Rosenblum. “The fact that she can show up unannounced and they are not in fear shows that they know she is on their side. You can’t buy that kind of good will.”
BJ’s would not release statistics on worker retention, pay, or benefits, though Sen did say that the company makes a higher-than-average, for retail, employer contribution to health care coverage for its workers, who are not unionized. And according to Flickinger, whose firm has conducted research on labor practices and retention rates at many retailers, BJ’s pays 15 to 30 percent more than most food, drug, and discount store competitors, and its worker turnover rate is, as a result, as little as a quarter of the rates seen at its competitors.
Yet when it comes to labor, BJ’s has not been without conflicts. In 2009, the company agreed to pay $9 million, without admission of wrongdoing, in a class action lawsuit brought by mid-level managers who said they were inappropriately exempted from overtime pay. There has also been a string of complaints filed against BJ’s with the Massachusetts Commission Against Discrimination, some of them alleging that the company practices age discrimination in hiring and firing corporate employees. And according to Aly Waddy, a campaign manager with the United Food and Commercial Workers 1500, which covers a large swath of New York state, in all of the campaigns it has run in recent years to unionize BJ’s stores, at least one employee working on the union drive was fired for his or her involvement.
When she is in a store, Sen’s depth of knowledge of the business (“These pallets are designed to fit exactly under the steel here and on the shelf. So the forklift driver can just come and push this pallet in here. When it sells down, he puts the next one in. So it’s very efficient”); detail orientation (“Our buyer does a really nice job coordinating the tags, ribbons, and wrapping paper so they all match”); and enthusiasm (“I just love our candy offerings. I think they’re so beautiful. For ten dollars!”) become immediately apparent.
She often asks workers and managers how she can help them do their jobs better. “I say to the team members, ‘If you had a magic wand, what would you do?’ And then I pause and say, ‘Because I do have a magic wand,’ ” Sen says. “What I am asking them to do is think expansively about what they would do if they could change the business and hopefully tell me something that would be helpful.” She also hosts coffee talks every week: Ten employees, from both the home office and the field, come in and talk to her about anything that’s on their minds. There is a waiting list to participate.
And the communication runs two ways. Sen pens a monthly newsletter that is sent to the entire 23,000-person company to give them information about the business and how it is doing. Under Sen’s leadership, BJ’s set up a program known as the Leadership Academy to train and bring store and corporate workers with management responsibility up through the ranks.
All these factors have come together, Sen says, to create a culture change at the company. “Our tradition was much more top down when it came to the field, a command-and-control mentality,” she says. “That’s different from my style – giving people a lot of information on what our goals are, giving them a lot of quantitative measures around what their results are, and letting them really have some level of entrepreneurship to accomplish what we want to accomplish. There is a great sense of pride and ownership around that.
“On any given day we have a billion dollars’ worth of merchandise throughout the chain,” she says. “You take the people away and we have nothing, it’s just a bunch of stuff. The forklift driver, the overnight crew, the cashiers, the women folding the apparel over there, they create the members’ experience.” To sum up her philosophy: “If you are not thinking about that guy and their life, you are missing the boat.”
That kind of treatment extends beyond the BJ’s team. Experts say Sen has excellent relations with suppliers, helping them expand their own businesses through their relationships with BJ’s. Flickinger, who has testified before the Federal Trade Commission about buying practices at some of BJ’s competitors, which he says can be harrowing, is dramatic: “Suppliers will literally run through burning buildings for BJ’s.”
Sen’s management style says a lot about her personality. Her friends say that even though she has become successful, powerful, and quite wealthy, she is still down-to-earth, loyal, and prone to playing down her accomplishments. Sen had a typical middle-class suburban Massachusetts upbringing in an atypical family. She grew up in Wakefield playing kickball in the street and was a cheerleader and played sports in high school, where she was known to her peers as smart, pretty – and Chinese. Her Irish-American mother married her Chinese-American father at a time when she says it was unusual to find Asian families in the suburbs.
At Boston College, she had no interest in preparing for a career in business, which she held in low esteem on account of what she describes as her hippie, liberal views. She studied French and spent her junior year in Paris. When the elderly woman she was staying with died, Sen moved in, as au pair, with a wealthy woman for whom she had baby-sat back home and who had relocated after divorcing. Sen was exposed to a level of wealth she had never before experienced.
After college, Sen decided to get into retailing because she felt it was a pursuit that combined her love of art and numbers. She started out in the executive training program at Jordan Marsh, then spent a decade working at Framingham-based Zayre Discount Stores in a variety of merchandising positions. In 1989, after the Zayre conglomerate was dismantled and Zayre Discount Stores was sold to Ames Department Store, she went to work for BJ’s, which had been a Zayre’s unit for five years.
Over the next 14 years, Sen and BJ’s grew up together. As the company went from a young start-up to a publicly held Fortune 500 company, Sen advanced through the ranks. That corporate climb didn’t mean forgoing a family or having a husband who sacrificed his career to support hers. Her college sweetheart and husband of 27 years, the late Michael Egan, was a microbiologist and CEO of a biotech company, and they worked as a team to raise their two children and to support each other’s careers. “Laura defies those stereotypes,” says Ann Carter, the CEO of Rasky Baerlein Strategic Communications in Boston, who has been friends with Sen since they met a decade ago serving on the board of a savings and loan, and whose firm does some public relations work for BJ’s. “She and Michael had as meaningful a peer relationship in marriage as I’ve ever seen.”
As much as her work means to her, friends say she has always kept it in perspective. When she was fired from BJ’s, she left the office, went out for a drink with a friend, then headed home to her vast Victorian in Brookline. Upbeat, forward-looking, and not prone to wallowing, Sen took it in stride. “These are not crying matters,” she says, laughing at the suggestion that she might have shed a tear or two after being fired from the company to which she had dedicated 14 years of her life. “I’m sorry, that’s not what I am about. . . . I don’t look back. What’s the point?”
Instead, Sen set out to figure out what was next. “My daughter was 15 and my son was 13,” she says. “I thought, ‘This is my big chance to be a mom.’ I’ve never been home being a mom. But all they needed at that point was money and a ride.”
So Sen launched a consulting business, advising consumer packaged-goods companies and sales brokerages – including the companies that sell to wholesale clubs like BJ’s – on business development, merchandising, and logistics. While she says she was happy with it, Carter says Sen seemed to find the work a little too easy. It did leave her ample time for the kids and the nonprofits she supports. Not content to give only money to charity, Sen also gives time. Her childhood friend Lisa Erban, who moved back to Wakefield to raise her family, recalls how Sen once took an intensive training course so she could volunteer as a tutor in Chinatown.
True to form, as a board member of two nonprofits, Sen gets to know the organizations from the ground up. At the Pine Street Inn, a homeless shelter and services provider, she occasionally shows up to serve dinner. Soon after joining the board of Boston Ballet, she began taking classes at the ballet’s studios in Newton, an endeavor she describes as both fun and mortifying.
About 3½ years into Sen’s consulting career, CEO Mike Wedge left BJ’s. Someone in the industry suggested she get in touch with Herb Zarkin, who had taken over as CEO. She says she was reluctant to call because it felt awkward – she had, after all, been fired from the company – but ultimately did, thinking she could offer her services as a consultant. They met for lunch at Ken’s Steak House in Framingham and, she says, Zarkin made it clear he wasn’t leaving the restaurant until she agreed to come back full time and make her way to the top. Sen says she was pretty surprised but also very happy.
“The next day I called her,” Zarkin says, “and I said, ‘You know, Laura, we never talked about titles, stock options, or salaries.’ And she said, ‘Herb, I trust you. Whatever you do I know will be the right thing.’ She isn’t driven by money or the title, she is driven by doing her job, coming up with new ideas, making sure we give back to the community. She is driven by all the right things.”
Money might not be what drives her, but she sure makes an awful lot of it. In 2009, her pay – including bonuses and stock options – was reported as $4.9 million.
As planned, Sen made her rise to the top. But right around the time Zarkin was to announce publicly that she would be CEO, her husband’s melanoma recurred, and it became rapidly apparent he wasn’t going to live. Sen’s friends recall how, with their kids off in college, she essentially moved into her husband’s hospital room. “When Michael was dying, Laura was starting to develop some public notoriety as a female CEO,” says Carter. “You couldn’t help but feel the irony of Laura finally getting her due, but knowing she would trade it all for some kind of miracle where Michael was concerned.”
That miracle didn’t come. Her husband died in April 2009 and, Carter says, Sen said she felt lucky to have her work because it forced her to get up every morning and gave her life structure. “She almost never skipped a beat. After a couple of weeks, she came back,” recalls Zarkin. “She came back to do the job she wanted to do.”
Sen’s leadership hasn’t just been good for morale among BJ’s employees, it has also been good for the company’s bottom line. Claiming just about 10 percent of the wholesale club market, BJ’s has always been dwarfed by competitors Costco and Sam’s Club. But analysts say Sen has pursued a successful strategy of differentiating BJ’s by making it a destination not just for a periodic big stock-up, but for weekly grocery shopping too. BJ’s shelves carry far more items than Sam’s or Costco’s do, and it sells most of them in conventional-sized packaging in addition to bulk. Fully 75 percent of BJ’s sales are in items that can be found in grocery stores, with food accounting for about 65 percent.
Even in a recession (some analysts say especially in a recession), the approach has been working. While traffic in the stores was on the decline in the last of the Wedge years, it has been on the upswing since Sen has been in charge, meaning that members are coming in more often. Profits are up, and so is the share price, around $45 at press time, up from less than $30 when she took over as CEO in 2009. Sales at individual stores, and particularly of perishable foods, have been growing, on average, at a faster rate since Sen came on board.
Experts in retailing and the supermarket business say that Sen has shown that she is able to understand what the shopper wants and to provide it. “CEOs of other companies are focused on opening stores or improving the bottom line, selling franchises, impressing shareholders. I think Laura Sen’s claim to fame will be driving a ‘Let’s understand the consumer’ mentality,” says analyst Phil Lempert, editor of the Supermarket Guru website in Santa Monica, California.
Wall Street analysts are also happy with the company’s performance. In addition to upping store traffic and sales, in the past four years, Sen has made a significant and long-overdue investment into information technology, which analysts predict will show effects on the bottom line in a year or two. And, still, there is room for growth. All this – plus the company’s balance sheet – make BJ’s an appealing candidate for a buyout.
Rumors in that vein spiked in July after Los Angeles-based private equity investment firm Leonard Green & Partners revealed it had taken a 9.5 percent stake in the company. In November, reports circulated that BJ’s had hired investment bank Morgan Stanley to explore its options for a sale. Taking the company private – and out from under the demands of Wall Street – could allow BJ’s to expand its market beyond its western frontier of Ohio and establish itself as a national chain, before going public again or being sold to a larger retailer.
BJ’s wouldn’t comment on a possible sale, but analysts predict it is likely to happen in the first quarter of this year. These deals often involve management shake-ups, and some say Sen might find herself out of a job. If that were to happen, she knows what she would do: “I’ve already done it. You go home and you start all over again.” Some analysts say BJ’s board should keep her at the helm because she has proved she can make the business work. But whatever form Sen’s wild ride takes, she’ll be able to say, without looking back, that it’s been a good one.
Catherine Elton is a freelance writer in Belmont. Send comments to firstname.lastname@example.org.