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New York — Financier-turned-retailer Eddie Lampert is trying to lure Vanessa Castagna into his realm.

Rumblings in the marketplace about Castagna heading to a major retailer reached a boiling point Wednesday as Lampert, the hedge fund investor who took Kmart out of bankruptcy and into a planned acquisition of Sears, Roebuck & Co., was said to be interested in her. Also in hot pursuit is Office Depot, which is scouting out a chief executive officer.

Reached by phone, Castagna, 55, said, “I haven’t accepted any offer, and I’m not going to make a decision for a while.”

Castagna is expected to make a decision after the holidays. Kmart Holdings Corp. did not return calls for comment.

Castagna, the former chairman and ceo of J.C. Penney’s stores, catalogue and Internet operation, left the retailer last month. Although considered the front-runner to succeed Allen Questrom, who retired on Dec. 1, as chairman and ceo of J.C. Penney Co., that post instead went to former LVMH Moët Hennessy Louis Vuitton executive Myron Ullman 3rd.

Because there was no noncompete restriction in her employment agreement with Penney’s, Castagna is free to work with any retailer.

Castagna’s name was linked to Sears as a possible addition to the retailer’s executive team almost immediately after the appointment of Ullman to the top Penney’s spot. It came up again when Kmart announced its planned purchase of Sears, a week after Castagna left Penney’s. With a background at Penney’s, Wal-Mart and Target, Castagna seems a natural fit for a role at the Kmart-Sears merged company.

“I could see Vanessa in the new holding company. Eddie Lampert is a strong chairman, but the key, and what this new company needs, is a very strong merchant,” said investment banker Peter Solomon of Peter J. Solomon Co.

According to several sources, Sears and Office Depot have been closely eyeing Castagna.

Elaine Hughes, who heads the executive search firm that bears her name, observed, “I think very well of Vanessa Castagna. She has certainly a proven track record from one environment to another, particularly the last one at Penney developing the strategy for the successful turnaround of a company at the midtier level. Going from a mass chain like Wal-Mart to a midtier retailer like Penney, and focusing on strategizing a turnaround and brand positioning, is similar to what one would have to do at Sears. Sears needs a review of its existing strategy, as well as [direction] on how to position it as a meaningful retailer.”

This story first appeared in the December 9, 2004 issue of WWD.  Subscribe Today.

At Sears, Castagna could work on refocusing its apparel offerings, as well as taking on the responsibility of merging the Sears and Kmart Holding Co. operations. In the combined company, which will be known as Sears Holding Corp., Lampert, who is currently chairman of Kmart Holding Corp., will become chairman, and his firm, ESL Investments, will hold a 42 percent stake in the new group.

One potential roadblock is that Castagna is more interested in filling a ceo spot, sources said, rather than being just a chief merchant.

So far, the top spot isn’t available at Sears Holding. Alan J. Lacy, chairman and ceo of Sears, Roebuck and Co., will become vice chairman and ceo of Sears Holding. Aylwin B. Lewis, president and ceo of Kmart, will become president and ceo of Sears Retail.

On the other hand, the open position at Office Depot, while it carries the ceo title, might not be the one that Castagna had in mind. One executive recruiter in New York said that, while Castagna has the merchandising and executive skills that are translatable to turning around a nonapparel operation, the issues inherent in the office supply chain’s operation have made it difficult for the retailer to find someone willing to take on the challenge.

Since leaving Penney’s on Nov. 14, Castagna has been busy exploring opportunities and examining different offers, one source familiar with the situation said. She has been contacted by both big and small retailers in need of talent, as well as by investor groups, the source added.

When Castagna left Penney’s, she said it was “an intense and a difficult decision, but the time is right.”

Ken Hicks, president and chief operating officer of stores and merchandise operations at Penney’s, took on Castagna’s responsibilities as a transitional step, the company said last month. Ullman, who took the helm from Questrom last week, held top executive spots at LVMH, the DFS Group and Macy’s.

“I’m not surprised that [Castagna’s] phone is ringing off the hook. She is a very accomplished merchant and a great executive,” said Hal Reiter, chairman and ceo of executive recruiting firm Herbert Mines.

Considered a talented merchant with the right combination of merchandising and operational skills, and one who is a team-builder, Castagna has vast experience on the apparel side. As senior vice president and general merchandise manager for women’s, she ran the apparel business at Wal-Mart, giving it a more focused presentation. Castagna also helped revive the apparel operation at Penney’s.

Prior to Wal-Mart, Castagna was a gmm at Target and also held posts at Federated Department Stores.

— With Contributions from David Moin and Arthur Zaczkiewicz

Vanessa Castagna’s Résumé

Aug. 1999-Nov. 2004: Executive vice president and chief operating officer of J.C. Penney stores division, merchandising and catalogue.

1996 to Aug. 1999: Senior vice president and general merchandise manager of women’s and juniors’ apparel, intimate apparel and accessories and children’s apparel at Wal-Mart.

1994 to 1996: Senior vice president and general merchandising manager for home decor, domestics, furniture, crafts and children’s apparel at Wal-Mart.

1992 to 1994: Held several senior-level positions, including senior vice president, general merchandising manager for women’s and juniors at Marshalls stores.

1985 to 1992: Vice president of merchandising for women’s at Target.

1972: Began career at Lazarus, a division of Federated Department Stores. Held positions of senior vice president and general merchandise manager.

1971: Graduated from Purdue University with a degree in psychology and speech education.

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