Not too many CFOs can claim to have picked up much of their management and leadership skills in the Vietnam War. Edward Moneypenny did.
Moneypenny, recently named finance chief at 7-Eleven, was drafted into the U.S. Army in 1968, just three months after he received a master’s degree in accounting science from the University of Illinois at Urbana-Champaign. Moneypenny, who was working in General Electric’s financial management training program at the time, was commissioned as a second lieutenant and shipped off to Southeast Asia. Once there, he was put in charge of 1,200 men. Although Moneypenny recalls his army days with fondness, three years of military service was more than enough. After demobilizing, he spent three years at Coopers and Lybrand before landing his first CFO position at Dallas-based Oryx Energy Co.
During his 11-year tenure at Oryx, Moneypenny helped oversee the company’s merger with Kerr-McGee Corp. He then signed on as CFO at Florida Progress Corp., a diversified electric power company, where he helped arrange its $8 billion marriage with Carolina Power & Light Co. (which subsequently changed its name to Progress Energy Inc.). Prior to joining 7-Eleven, Moneypenny was executive vice president and CFO at Covanta Energy Corp., a developer of power-generation projects that is based in Fairfield, New Jersey.
Moneypenny jumped to 7-Eleven in February. The company operates or franchises approximately 5,800 stores in the United States and Canada, and licenses more than 16,800 stores in 17 other countries and U.S. territories. The Dallas-based retailer reported net earnings of $17.1 million in the fourth quarter, a 3 percent increase over the $14.2 million recorded in the year-ago quarter. Total revenue in Q4 grew slightly, to $2.33 billion from $2.32 billion in the fourth quarter of 2000.
Moneypenny recently spoke with CFO.com’s Jennifer Caplan about making the switch from the energy sector to retailing, staying ahead of the competition in a cutthroat sector, and dealing with skeptics on Wall Street.
How did your time in the army help your career?
It actually ended up being a great experience for me in terms of my career. I was 25 years old at the time, and in my first job in the army I was put in charge of about 1,200 men. Right out of the gate I had a huge management job, having had very limited legitimate work experience prior. I was able to learn leadership and motivational skills very early on. You just don’t get that kind of responsibility at such a young age in a traditional nonmilitary career.
You joined 7-Eleven after being in the energy industry for a number of years. Why did you make the switch?
This opportunity really sought me out. I really wasn’t looking to change industries. But the offer from 7-Eleven was a unique opportunity to join a company that I believed still had its best years out in front of it. There are a lot of really interesting initiatives going on here that will be really exciting to work on over the next 12 to 18 months.
The company needs to change its profile with the investment community, for example, and I feel that I will really have a chance to help finance the growth of this company. It has been a great opportunity that I caught at the perfect time. It just so happened to be in the retail industry.
You joined 7-Eleven in February. What have been the biggest challenges of your new job thus far?
It’s really been getting into the retail thick of things—and running up the learning curve in terms of what makes the value proposition work in the retail industry. This is a very large company, so there are many people to get to know.
It is also a company that hasn’t had a CFO for about a year. So the finance and planning organization has really been in need of some looking after. The biggest challenges have not been on the technical side of the job, because I have done a lot of the financing and strategy before. For me the hard part has been getting up to speed on the specifics of retail and the specific needs of the organization.
You joined 7-Eleven with plenty of experience in the M&A area. Do you think that was one of the reasons management chose to hire you?
I don’t think so. But I do think that understanding the dynamics of how transactions work and being able to look for value-creating opportunities are important assets to any company. I’ve got a lot of good experience across a broad range of areas, and I think that is why 7-Eleven was interested in me.
Some analysts have expressed skepticism over 7-Eleven’s capacity to translate investments in employee-training initiatives, technology, marketing, and financial services into profits. How do you deal with that skepticism?
I think that what people are saying is that investors want to see companies making investments that will manifest themselves in earnings. We are in a bit of a transition year as we finish up some of these major initiatives. Investors are saying they understand why we want to invest in these areas but they want to see the results. So our job is to present as much evidence, whether it be anecdotal or otherwise, that all the dots are being connected here, which is what we will do.
Despite the recession, 7-Eleven reported an 18 percent rise in fourth-quarter operating profit. Why is that?
Convenience is an industry that tends to stay strong regardless of the economic conditions. I wouldn’t say we are recession-proof, but convenience is something that is so integral to people’s lives. Our real challenge in a very competitive retail environment is to make sure we put products into our stores that people will buy.
Part of that depends on technology and making sure that we have the best information to make choices about what products go into our stores at what point in time. Merchandising is crucial for us, and getting that right goes a long way toward any retailer’s success, regardless of the economic environment.
In recent years, a host of 24-hour convenience-store chains have sprung up. How do you stay ahead of the competition in an industry whose goods and services are so similar?
Because of the power of our retail information system and knowing store by store, hour by hour, item by item, what is selling, a lot of our suppliers want to come to us first to launch a program or to test a product. We have really been honing our skills over the past 5 to 10 years, in large part through the use of intelligence and technology, to make sure we do a superb job feeding the needs of our customers. As a result, we’ve had about 4 straight years of increased sales.
Do you think your financial-services strategy will help boost earnings?
We sell $4 billion worth of money orders and do between 100 and 150 million ATM transactions every year. So we are already going strong in the financial-services business. But we wanted to make these services more convenient by providing them in a kiosk environment. We have deployed and are testing Web-enabled kiosks in about 98 stores in Texas and Florida, and are engaging premier companies to be partners with us in this effort. American Express, for instance, is our primary ATM provider; Western Union does money orders and transfers; and Verizon will come on board when we do a national rollout to provide telecommunications services.
This is a new venture for us, and there is nothing else like it out there. It will become a greater percent of our business going forward. We envision possibly deploying another 1,000 kiosks within the next year.
How involved are you in shaping those sorts of strategic initiatives at the company?
One of the departments I oversee is the strategic planning department for the corporation, which I have managed basically everywhere I have been. At 7-Eleven, I will therefore be integrally involved in all the company’s strategic issues. Part of the key of doing that is making sure you work closely with all the operating groups, because they are really the people who execute the strategy.