By and  on September 17, 2013

NEW YORK — Fresh talent and money will be pouring into Saks Fifth Avenue.

Marigay McKee, the chief merchant at Harrods, has been named president of Saks Inc., and Jennifer de Winter, a Saks veteran with the current title of executive vice president and director of stores, will become executive vice president and chief merchandising officer, reporting to McKee. The appointments will be effective once Hudson’s Bay Co. completes its $2.9 billion acquisition of Saks, which is expected around November.

“We believe matching Marigay with Jennifer creates a winning team that would help catapult Saks to the pinnacle of luxury,” Richard Baker, HBC’s chairman and chief executive officer, told WWD in an exclusive interview.

“As part of that, we are committing to spend $200 million to renovate our Fifth Avenue flagship and do what it takes to turn it into the most glamorous and luxurious department store in the world. We are thinking about touching, modifying and retrofitting the entire building,” Baker said, adding that it was too early to disclose specifics on the project.

One possibility is to convert the lower level of the 600,000-square-foot flagship into selling space so cosmetics, jewelry and luxury accessories get expanded. Those categories seem cramped right now on the ground floor.

RELATED STORY: Stephen Sadove, Ronald Frasch to Leave Saks >>

McKee will succeed Ron Frasch, who currently is president and chief merchandising officer. Also departing will be Stephen I. Sadove, Saks’ chairman and ceo as reported. Sadove will not be replaced. More personnel changes are likely.

Baker also disclosed that a new corporate structure — the office of the chairman — has been formed at HBC, which also operates Lord & Taylor and Hudson’s Bay department stores. Baker and Don Watros, the chief operating officer who is the key architect in centralizing the HBC operations and Baker’s right-hand man, will be the members of the chairman’s office.

The senior executives of HBC’s retail operations, as well as other key holding company executives and the heads of certain shared service units, will report into the chairman’s office to both Baker and Watros. Marc Metrick, who originally came to HBC as chief marketing officer and recently shifted to executive vice president, has just become chief administrative officer of HBC. Watros and Metrick are both former Saks executives.

Saks’ merchandising, marketing and store operation heads will report to McKee. General merchandise managers will report to de Winter.

McKee, who spent 14 years at Harrods, was a major force in transforming the store into an international luxury and fashion destination. She’ll join Saks in mid-December and is relocating to the U.S. with her two teenage children.

During an interview in London, she said she hoped to bring “a new vision and maybe a new modus operandi” to Saks. “When I arrive, I hope that I will be welcomed as someone who wants to be a collaborator, a motivator and an inspirer, more than just a very strategic leader,” she said.

McKee, who has overseen the revamp of a major chunk of merchandise space at Harrods — most recently jewelry — said her approach is straightforward. “People are key. The product is key, but the place is also key,” she said. “And when you’ve got the people, the place and product all in line, you have the right luxury position for success.

“I think I’ve always wanted to leave the customers breathless,” McKee added. “I’ve always wanted to leave the teams breathless, and I think that’s kind of been a word we have always laughed at. But [the idea] has been very close to us, so to go to the other side of the world, to take on a new challenge, I see it as a very different role. It’s working to position those brands in the right places, in the right environment. It’s making sure the right people are in the right remits, but this is an opportunity to [undertake] a transformational evolution of an already well-established, iconic American brand.

“It’s a big change. It’s a new country, a new life, a new challenge, and to be fair, I probably wouldn’t have been able to move had it not been something spectacular in terms of a challenge,” she said. “Harrods is an amazing store. It’s one door — a $2 billion door. Saks has got 40 odd doors.” Saks Inc. operates 41 Saks Fifth Avenue stores, 69 Off 5th outlets and Saks is expected to have 40 full-line stores by the end of 2014.

McKee joins Saks with an extensive résumé in the luxury retail sector and over 20 years of management and merchandising experience. At Harrods as chief merchant, she oversaw the planning and implementation of merchandising and creative strategies since 2011 and served on the board since 2005. She joined Harrods in 1999 and became general merchandise manager of beauty in 2000, eventually adding responsibilities for accessories, jewelry and women’s. She is credited with driving profits and growth strategies.

The key in her new role will be how well she works with Baker.

“Hudson’s Bay wants some new blood and Richard wants to feel comfortable with the people he puts in there. But he exerts a strong sense of control, even though he doesn’t have specific merchandising skills,” said one consultant from a major retail consulting firm. “Sadove gave Frasch a lot of merchandising independence.”

Baker’s tight management style, sources said, clashed with two former Lord & Taylor ceo’s, Brendan Hoffman and Jane Elfers. Currently, there is no ceo at Lord & Taylor, and Baker serves as ceo of all the retail divisions.

Another challenge McKee and Baker face together is improving Saks’ profitability, which has been anemic for many years. It’s been impacted by the Great Recession, ownership changes and management changes, which designer and luxury brands are particularly sensitive to.

Other challenges at Saks are to continue to boost e-commerce, develop more omnichannel operations and continue to weed out weak stores. In addition, Baker expects to expand Saks to Canada, and foresees up to seven full-line Saks stores and 25 Off 5th outlets in that country. With Nordstrom already lining up locations in Canada, “Saks will have real competition there,” said retail analyst Walter Loeb. “The Nordstrom name is a better known name in Canada.”

Baker will also be consolidating back-of-the-house areas at Saks into HBC and will be cutting staff to centralize operations. He’s set a goal of at least $100 million in annual savings at Saks through the cuts. Such areas as human resources, legal, accounting and IT will be affected.

While Sadove’s departure was expected, Frasch’s was not, prompting speculation that he would have preferred to stay. “It’s our prerogative to make changes,” Baker said, without commenting specifically on Frasch, who could not be reached.

To relieve concerns that Saks will lose its identity as it merges into HBC, Watros explained that the new chairman’s office will “provide each brand with the resources and investment it needs to best serve its customers and realize its growth potential.”

Baker added that Saks will maintain its own planners and buyers and operate with “a separate management.” He also said the chairman’s office creates a “robust HBC leadership team” and that the goals of the new structure are to “maintain the unique identity of each retail brand, to build an effective and cost-efficient platform of shared services, and to position the company for growth and expansion.”

Acknowledging that changes at Saks are afoot even before the deal is actually closed, Baker said, “We are never one to move slowly. We have lots of opportunity and lots of work ahead. Saks needs to go to the next level.”

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