Myron E. "Mike" Ullman 3rd, one of the key protagonists in one of the most dramatic and tumultuous events in modern retail history—the 1992 bankruptcy of R.H. Macy and the bitter battle for control of the legendary retailer that followed—recently reflected on that period of his career. Named co-chairman of Macy’s three months before the company filed for Chapter 11 bankruptcy protection, Ullman found himself fighting to keep Macy’s independent as a variety of special interests pressed competing agendas.
“I try to suppress that era of my life,” says Ullman, who is now chairman and chief executive offer of J.C. Penney, half-joking. “There were two phases—pre-bankruptcy and postbankruptcy, which was about rebuilding Macy’s. What I remember most is the exhilaration of the team in being able to turn Macy’s around.”
The bankruptcy proceedings had all the cloak-and-dagger intrigue of a spy novel. Ullman secretly negotiated with Fidelity Investments, one of Macy’s largest and most influential creditors, and the GE Capital Corp., which held two seats on the retailer’s board. They were working on a proposal that would have allowed the company to exit bankruptcy protection and maintain its independence while satisfying senior creditors.
“We rented a Broadway theater and put on a show for [the creditors] about why Macy’s should remain independent,” Ullman recalls. “In the show, we talked about our private label programs, which, at the time, we perceived to be better than Federated’s. Our stores were more productive than Federated’s.”
When a Macy’s board member, the late Laurence A. Tisch, former chairman and ceo of CBS Inc. and Loews Corp., learned of Ullman’s meeting with the creditors, he became furious. Many retail experts believe the rift with Tisch was Ullman’s downfall. Tisch, a large investor in the chain, demanded that the finance committee come up with its own valuation for the company.
“If you look at the board at the time, [members,] in many cases, owned bonds and equity,” Ullman says. “They were trying to be the board of a bankrupt company.” Three directors— shopping mall developer Alfred Taubman; Harold M. Williams, a former chairman of the Securities and Exchange Commission, and Louis Page, executive director of a Hong Kong conglomerate—sided with Tisch.
Federated Department Stores entered the fray in February 1994 with the dramatic news that it wanted to acquire the $6.6 billion Macy’s. Ullman was ultimately unsuccessful in his bid to keep the retailer independent. The Macy’s board was outbid by Federated’s $4.1 billion offer. Yet Ullman says he is proud of his team’s efforts. “We declared victory,” he says. “We could have been liquidated at $1.8 billion and everyone who had [invested] money in Macy’s would have gone home defeated. We got full value or more for the company.”
A nuts-and-bolts operations man with a common touch, Ullman’s management style was more inclusive than that of his predecessor, Edward Finkelstein, who was loathe to ask underlings for their opinions and conducted meetings with pomp and circumstance in his office. Ullman graduated from the University of Cincinnati, worked at IBM for seven years and then returned to his alma mater to become chief business officer at age 29. After that, he became a White House Fellow in the Office of the U.S. Trade Representative. Ullman helped create computer-assisted buying and planning programs at his next job, at Federated’s Sanger Harris chain. He then honed his management skills running Wharf Holdings, a Hong Kong conglomerate.
Ullman was recruited by Finkelstein in November 1988 as executive vice president to shore up Macy’s balance sheet. After a couple of promotions, he became co-chairman and co-ceo in April 1992 when Finkelstein left, and subsequently became chairman and ceo.
The experience of “being the chief business officer of a major university when I was very young” gave Ullman the confidence to run a large organization such as Macy’s. “When you run a university, you have no employees, just constituents,” he says. “You develop a style of leadership and management that involves persuasion and logic and having a strong point of view.”
During the turnaround effort, Ullman remembers viewing creditors, board members and employees as separate constituencies. Eager to set the right tone, Ullman didn’t give the effort a sad-sack name like “Saving Macy’s” or “Salvaging Macy’s,” but rather called it “Rebuilding Macy’s” internally.
For a company top-heavy with management and a large workforce of hourly employees adrift and confused by the bankruptcy, Ullman introduced a satellite communications network to disseminate information to sales associates and stores across the U.S.—everything from product demonstrations to news about Macy’s financial performance.
Ullman tried to restore Macy’s luster through bankruptcy via several initiatives. One attempt, TV Macy’s, a home shopping concept with highprofile partners HSN, CBS 60 Minutes executive producer and creator Don Hewitt and Cablevision owner Charles Dolan, never came to fruition. “The concept was that we would be the first department store in your living room,” Ullman says. “The idea was to bring the Macy’s assortments and private labels into the TV shopping age. In retrospect, it was more a sense of proving Macy’s was viable when there was a question of whether it would survive. When Federated did the acquisition, they had so much on their plate, [TV Macy’s] fell by the wayside.
“It became clear that TV shopping is a very small niche,” Ullman adds. “We were ahead of our time in thinking about it. If you look at what’s out there today, essentially, HSN or QVC have developed their own businesses with a pretty targeted niche. It’s not a broad, across-the-board assortment. Our [J.C. Penney] dot-com business is the biggest in the industry. It’s the hub of what we’re doing. It’s six times the size of Kohl’s and three-and-a-half times the size of Macy’s.”
Ullman joined Penney’s in December 2004—ironically, to succeed Allen I. Questrom, who ousted him as chairman and ceo of Macy’s a decade earlier. Ullman became chairman and ceo of DFS Group on Feb. 1, 1995—one day after stepping down from the helm of Macy’s. Ullman also held top posts at LVMH Moët Hennessy Louis Vuitton in the late Nineties, and retired from LVMH in 2001, but has consulted and served on some corporate and nonprofit boards, including Polo Ralph Lauren Corp., Starbucks Coffee Co., Taubman Centers and Segway LLC.
Still, the Macy’s bankruptcy took a personal toll. “I had an apartment in the city,” he recalls. “In January 1992, the month of the filing, we had board meetings twice a day. The one time I went home was for a party on Super Bowl Sunday. When I got there, I got a call and had to go right back.”
In hindsight, Ullman allows that Federated’s takeover of Macy’s may have been a good move. “I’d rather have won and have an independent Macy’s. That’s what I thought we should have done. But being objective, I’m not sure that Macy’s isn’t a more successful company now.”
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