By  on August 17, 2007

MONTREAL — Jerry Zucker, the South Carolina businessman who bought Hudson's Bay Co. last year and took it private, has replaced his most senior executive with his closest business ally in a move seen as the first of many changes.

Michael Rousseau, who was part of the HBC executive team that initially fought Zucker's takeover of the retailer, has been replaced as president by Robert Johnston, a vice president of Zucker's InterTech Group of Charleston, S.C. Johnston will relocate to Toronto with his family.

HBC, which runs the Bay department stores, Zellers discount stores and Home Outfitters, has been struggling recently and is trying to differentiate itself from the competition by moving its Bay stores upscale.

"I've been expecting something like this for a long time and was surprised it didn't happen sooner," said retail analyst Wendy Evans of Evans & Co. Consultants in Toronto. "I think other changes are on the way as they try to move the Bay more upscale."

While Evans has noticed some improvement in service at Bay stores since Zucker took over, she said the selection of merchandise isn't much better.

More executives are likely to be replaced, said David Howell, president of Associate Marketing International in Toronto.

"They still have a lot of work to do to get people back in the stores and they don't have the right merchandisers to drive the Zellers stores," Howell said.

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