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Executive Summary

REVCO BANISHES ODD LOT DISSIDENTS IN LATEST ROUND OF FEUD between Revco top management and Odd Lot principles Bernard Marden and Isaac Perlmutter, former chairman and president, respectively, of the Revco subsidiary. In a Feb. 4 press release announcing the appointment of new management to head Odd Lot, Revco reported that Marden and Perlmutter's "connections with the company have been terminated." However, the two Odd Lot dissidents still hold the 12% block of Revco outstanding shares they received from the sale of Odd Lot last April. The firing of the two Odd Lot officers is the epilogue to last summer's challenge to Revco Chairman Sidney Dworkin's leadership of the chain by the Odd Lot dissidents. Using their 12% share of Revco stock as leverage, Marden and Perlmutter threatened to force a proxy battle or an unfriendly takeover of the chain unless Dworkin agreed to step down. A prolonged struggle for control of Revco was averted in September when shareholders authorized the chain's management to exercise its right of first refusal to purchase the dissidents' shares if the shares are offered by Marden and Perlmutter. Current Odd Lot Exec VP Stephen Adler and Leo Kaye, formerly head of his own firm, Americore, will replace Marden and Perlmutter, "effective immediately," Revco said. Under the new Odd Lot management arrangement, Adler, who has been with Odd Lot for five years, will retain his exec VP title and "will have responsibility for retail operations," the Revco release notes. Kay, who comes to Revco with "more than 20 years of experience buying promotional merchandise from mfrs., retail chains and importers and selling to mass discount chains," will head Odd Lot's Tangible whsle. div., Revco said. The Revco board is apparently making use of Odd Lot's recent weak performance to justify the firing of the two dissident shareholders. "With this new management plan in place, we have an excellent opportunity to return Odd Lot to sound, profitable operation," Dworkin said. In Revco's most recent financial report for the second quarter (ended Nov. 17) of FY 1985, the chain partly attributed a drop in net earnings "to an unexpectedly poor performance by Odd Lot." Second quarter sales for the Tangible div. fell 25%, while like-store volume from Odd Lot's retail div. slipped 5%, Revco noted at the time. Revco earnings were also hurt by higher interest expenses and inventory financing costs primarily to cover large purchases of close-out merchandise by Odd Lot.

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