Ross Roy regroups By David Kile

The sale of a chunk of Calet, Hirsch, Ferrell/N.Y. to management could be the first phase of a broad restructuring of parent Ross Roy Group following the death of its longtime chair

Sources familiar with Ross Roy said the restructuring is part of a broad plan to whittle the firm down to its core business and shore up client relationships, especially the Kmart account that had been particularly dependent on Fortinberry.
Though theoretically CHF, which bills about $110 million, is one agency headed by chairman and chief executive Richard Calvillo, it essentially operates as two units: one for Kmart and the other for the rest of the clients.
Vice chairman and executive creative officer Peter Hirsch exclusively tends Kmart’s national advertising and he will remain under the Ross Roy umbrella in a New York field office in that role, sources said.
Calvillo and vice chairman and executive creative officer John Ferrell handle the agency’s other accounts, including Stolichnaya Vodka, Giant-Eagle Supermarkets and Toshiba, plus CHF’s design and direct marketing units. Sources said that pair and an undetermined number of other employees plan to open a new agency under a new name.
Ross Roy chief Peter Mills, who was confirmed as chairman and chief executive of Ross Roy Group last week after being head of Ross Roy Inc., said he could not comment on any plan afoot to sell CHF. But, he said, “I think for us to properly serve Kmart, it is important for us to have a window on the world from New York, where the fashion industry is based.”
Depite Hirsch’s continued presence on the business, agency executives inside Ross Roy and at competing agencies look upon Kmart, which spends over $200 million a year on advertising, as vulnerable. A year of distraction at Ross Roy, and the passing of Fortinberry–who was close friends with Kmart chairman Joe Antonini–may have tested the strength of the relationship.
Ross Roy spent many months in talks to sell itself to BBDO. When those talks broke off, Fortinberry named Mills, an outsider, as his successor.
“Given all that has gone on in the last year, if I was a competing agency, I would be trying to get a meeting with Kmart,” said a high-ranking Ross Roy executive.
The lock that Ross Roy seemed to have on Kmart as recently as last year, though, doesn’t seem to be as ironclad as it once was. Where Kmart at one time consolidated its specialty retailers at the agency as it acquired or started them, Office Max was given the freedom last year to fire Ross Roy.
Copyright Adweek L.P. (1993)