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Rowland Schaefer, 83, has been in charge at Claire’s Stores Inc. “forever,” as one company employee puts it. Indeed, in a very unusual situation for the transaction-minded corporate scene in South Florida, the founder of Claire’s has held the combined offices of president, CEO and chairman since 1961. What’s more, the Schaefer family owns nearly 40 percent of the company’s voting stock, and, not surprisingly, family members are highly involved in the business. Schaefer’s two daughters, Marla L. Schaefer, 50, and Eileen Bonnie Schaefer, 47, are vice chairwomen of the board. Does that mean that no one but one of the daughters could be the next CEO? Schaefer declined to be interviewed for this article, and other company executives did not return phone calls. But what remains clear is that there is no other heir apparent in sight, and outsiders, who have held the No. 2 job at Claire’s, haven’t found it easy to stay on board. In 1999, Schaefer fired Mark Hoffman as president and COO of Claire’s Boutiques and hired Thomas A. Souza from Sports Authority to replace him, a move that caused concern among analysts who liked what Hoffman had done. But Souza didn’t last long, quitting in January 2000. He was followed by Marty Nealon, the former president of boutique chain Afterthoughts. Nealon, who couldn’t be reached for comment, stepped down in September after just nine months on the job. It was the fourth resignation of someone holding the company’s No. 2 job since 1998. None of which seems to be concerning Schaefer as far as the company’s ability to recruit goes. A company spokeswoman told trade publication Retail Week that Nealon’s decision to quit was “basically due to difficult philosophical reasons as to how to run the Claire’s business. She wanted to run the business in a different way to Mr. Schaefer.” Schaefer further addressed Wall Street’s concerns by saying the company shouldn’t have hired a No. 2 person in the first place. Experienced managers are already in place, and they make decisions in entrepreneurial ways, without a need for additional corporate layers. “After the departure of Marty Nealon, we began to re-examine how we function as an organization by speaking with our department heads,” Schaefer said in a December press release. “In the past, we had tried to overlay a corporate hierarchy on what is essentially an entrepreneurial entity. We have decided to work with a flat organizational structure, which is how we have been operating for years. Department heads, many of whom have been doing their jobs at Claire’s for more than 10 years, communicate directly with each other and with me.” To be sure, under Schaefer, the Pembroke Pines company has flourished. Claire’s has become the world’s largest retailer of teenage knick-knacks, with nearly 3,000 shops worldwide. Claire’s has been profitable and is growing fast. But the fast-growth ride at Claire’s has become bumpy recently, which has Wall Street observers increasingly concerned over the succession issue and family influence. “It would be fine” if one of the daughters or both daughters were to inherit their father’s position, says Steven Richter, an analyst with Tucker Anthony Capital Markets. “But the key thing would be to add a strong divisional president to run the day-to-day operations. They don’t have that person today.” Others point out that Claire’s lack of an upper-management tier is short-sighted, and one of the few things Claire’s is doing wrong. “Claire’s Stores should have begun to search for top managers yesterday,” says Jack Smith, former CEO of Sports Authority. An admirer of the Claire’s concept, Smith nominated Schaefer for the Nova Southeastern University Hall of Fame. But Smith, who was succeeded at Sports Authority in 1998 by an executive he brought in, says Schaefer isn’t doing enough in management recruiting. “The key to success of any good business is good quality management,” Smith says. “Now is the time to find good quality people, with all the troubled retail companies.” Nonetheless, it is likely any outsider would have to either do away with the family culture, or find a way to fit in. “This company is surrounded by nepotism,” says one observer who asked not to be identified. “As a CEO, I wouldn’t want to be working there.”

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