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The reins are being passed at Neiman Marcus.
This story first appeared in the April 27, 2010 issue of WWD. Subscribe Today.
Burton M. Tansky, president and chief executive officer of Neiman Marcus Inc. and its wholly owned subsidiary, The Neiman Marcus Group, and a leading figure in luxury retailing for three decades, will retire on Oct. 6. Karen W. Katz, president and ceo of Neiman Marcus Stores and executive vice president of the group, will succeed Tansky as president and ceo, in a transition that has been long expected but remained a mystery as to exactly when.
Jim Gold, president and ceo of the Bergdorf Goodman division, has been named president of specialty retail, a new position in which he will oversee the merchandising and store operations for Neiman Marcus full-line stores as well as Bergdorf Goodman.
The stunning news that an industry lion would be saying goodbye came Monday afternoon, four blocks from Neiman’s flagship in downtown Dallas at the Majestic Theatre, where the company was holding its twice-annual business update meeting. Tansky, 72, used the occasion to make his surprise announcement, addressing 700 local employees as well as the general managers of the 41 Neiman Marcus stores.
“These things are very emotional,” Tansky told WWD. “I’m sure people were surprised. We kept it very low profile. The meeting today was a good time for me to say what was happening to our team, to do it personally, rather than through a memo, and I was able to do it with a little lighthearted banter. I am relieved now that it’s out. We can start the transition in the open. There is a lot to be done.
“Forty nine years ago I started at Kaufmann’s, and I have been at Neiman Marcus for 20 years, and 13 years at Saks,” Tansky continued. “I am looking forward to a new phase, spending time with my wife and family. I’m leaving the company in very, very good hands. The next generation of leaders is in place. We all share in the vision.”
Tansky has been steadfast in maintaining Neiman’s focus on luxury designer labels and brands, even through the recession when the sector was among the hardest hit and the company was forced to slash millions of dollars in expenses and inventory and sharply reduce the workforce. From fall 2008 to fall 2009, when sales were plummeting, markdowns were skyrocketing and the outlook for luxury was dim, Tansky stayed firm in his belief in the resiliency of his well-heeled customers and that they would never stop shopping, just maybe buy less on each trip to the store.
The steep downturn in luxury also derailed plans for a Neiman’s initial public offering and some store openings, both of which seem on the back burner for now given the economy.
“Neiman Marcus has improved considerably since December,” he said Monday. “I am pleased with the progress we are making. There is still a lot of work, but luxury is alive and well and I have said that all along. There are many naysayers out there, but they are wrong. We came back very strong. It’s good to be right, and we have been right often. The recession only meant being in a slowdown. Our customers are not prepared to give up luxury.”
Neiman Marcus Inc. reported net earnings of $4 million for its second quarter ended Jan. 30, compared with a net loss of $509.2 million in the same period in the prior year. For its fiscal year ended Aug. 1, 2009, Neiman’s reported $3.64 billion in revenues.
Most of Tansky’s tenure was marked by elevating store productivity, and consistency in presentation and service, door-to-door, with dominant designer departments from the likes of Giorgio Armani, Chanel and Gucci.
He is also credited with keeping Neiman’s expansion methodical, knowing full well that not every affluent community would accept the retailer’s offering, but believing that even a mature chain founded in 1907 had room to grow. Under his leadership, Neiman’s demonstrated a knack for tapping areas of rising wealth, such as Austin, Tex., and Charlotte, S.C., in the Nineties, which not much earlier would have been unthinkable.
Perhaps most importantly, Tansky was very visible in fashion and retail circles, a front-row regular at the New York and European collections, and instrumental in building strong ties with domestic and foreign vendors. The Neiman Marcus staff hasn’t changed much under his leadership and he has been widely honored at industry black-tie events, where he always could get a crowd laughing with the wit of a droll stand-up. At the store’s 90th anniversary party in Dallas, which was more like a hoedown, Tansky donned a Stetson and perched himself on a longhorn.
He grew up in a working class neighborhood in Pittsburgh. His early retail days were in mainstream department stores, such as Kaufmann’s and Filene’s. Nevertheless, he seemed very much at home as a showman in the lofty world of high-end fashion, filling key roles at Saks Fifth Avenue, where he rose to president, and Bergdorf’s, which he joined in 1989 as chairman and ceo, before moving to Dallas to head up the Neiman Marcus chain, and eventually the entire Neiman Marcus Group. He will remain on the scene through the management transition and after October as non-executive chairman.
“We greatly admire Burt Tansky and the significant accomplishments he has achieved throughout his successful career,” said Kewsong Lee, managing director, Warburg Pincus, which along with Texas Pacific Group bought Neiman’s for $5.1 billion in 2005 and took it private. “Burt propelled Neiman Marcus to the top of the industry and we look forward to continuing to work with him as the chairman of our board.”
Jim Coulter, founding partner of TPG Capital, said Tansky has been an “extraordinary leader for Neiman Marcus and an icon in the retail industry.”
Also effective in October, James E. Skinner, executive vice president and chief financial officer of the Neiman Marcus Group, becomes executive vice president, chief operating officer and chief financial officer. Skinner has been in his current position since 2008 and joined the company in 2001 as senior vice president, chief financial officer.
Skinner, Gold and Gerald A. Barnes, president of Neiman Marcus Direct, will report to Katz.
The changing of the guard at NMG seems symbolic with the fast-evolving world of luxury.
“I do think we are coming out of the recession,” Katz said. “There is still a place for a luxury specialty store like Neiman Marcus. Our customers are shopping differently than before. They are thinking more carefully about what to buy, making sure there is quality and authenticity behind the brands. Any company of our age and size has to evolve. We are evolving. We have a number of strategies we continue to work on and we believe the core Neiman Marcus business will have growth. The jewel in the crown is Bergdorf Goodman. It has continued growth opportunities,” she said, adding that there is also a new off-price strategy and further potential for neimanmarcus.com.
“Neiman Marcus will remain in the luxury space we are in, but there is some flexibility to experiment with several things,” she said.
Come fall, all eyes will be on Katz. She’s a veteran of Neiman’s, as both a shopper and worker. As a Dallas native, she visited Neiman’s as a child. “I was always intrigued by the allure and mystique of Neiman Marcus,” she once told WWD. “As much as you know the merchandise as a consumer, you don’t appreciate it until you are on the inside.”
Her early days in retail were at the former Foley’s chain and, in 1985, she became an assistant manager of Neiman’s Houston unit.
Prior to her current position, Katz was president of Neiman Marcus Direct, executive vice president of Neiman Marcus Stores, and senior vice president, director of stores. She emerged as the most likely Tansky successor in 2007 when she was named to the office of the chairman, formed at that time. As part of the office, she took on the role of executive vice president of the group, entailing new responsibilities for strategy, business development and marketing.
Katz becomes one of the few females running a major retail operation in the U.S. and will be challenged to guide Neiman’s through what’s increasingly become the “democratization” of luxury, whereby many major designers the retailer once had exclusively embark on secondary lines or one-off’s for mass consumption at such chains as Target, Kohl’s or H&M.
She will also be challenged to further the company’s efforts to attract younger generations of shoppers through contemporary offerings and emerging labels and determine the future for the Cusp business, launched in 2006. Cusp, with a handful of locations, caters to 25- to 40-year-olds, offering contemporary sportswear and accessories. Neiman’s has just begun to explore a new format for its Last Call outlet operation and will be more aggressive in the outlet sector, among the strongest in the retail industry currently.
International growth is another possibility, though the Neiman’s name is not seen to be as portable as Saks Fifth Avenue or Bloomingdale’s, which have both within the last few years opened overseas locations. In addition, Tansky and the organization have grappled from time to time with the notion of expanding Bergdorf Goodman to other locations such as Las Vegas and Chicago, and developing a more robust gift and home businesses.
Gold, who joined the company in 1991, has been mentored by Tansky, and has long been considered an up-and-comer. Prior to his current position at Bergdorf’s, he was senior vice president and general merchandise manager for Neiman Marcus Stores and vice president of the Last Call Clearance Store Division. As the head of Bergdorf’s, he has overseen major renovations through much of the retail space, kept a rigorous calendar of parties and designer appearances to draw in the younger generation of shoppers while maintaining the tried and true, and spurred growth on the Internet.
Gold said he will relocate to Dallas, although he will still spend a lot of time in New York for Bergdorf’s.
“We are going through a transition period. Some details will have to be finalized, but it’s a nice long transition period,” he said.
Between Neiman’s and Bergdorf’s, Gold said that going forward, there could be more sharing of best practices, though from an organizational standpoint, both are well structured. “There are lots of opportunities to share ideas even more so,” he said. “We’ve always have done that. Going forward, the lines of communication will open even more. I’ve been very fortunate to have Mr. Tansky as a mentor. I’ve learned a tremendous amount from him. It’s a bittersweet day here. I am very much looking forward to my new responsibility, but Burt has been an anchor for the company. This is challenging personally. We developed a close relationship over the years.”