NEW YORK -- Chaim Y. Edelstein, the straightforward, demanding chairman and chief executive officer of Abraham & Straus/Jordan Marsh, resigned Friday.
He is leaving a $1.4 billion chain, the largest division of Federated Department Stores Inc., but one that has not been living up to expectations.
"I've been doing this job for nine years. It's time for a change," said Edelstein, who was reached at his office in the Brooklyn-based A&S. "I will announce my plans shortly." He said his last day would be within a couple of weeks. Asked if he was forced out, Edelstein responded, "The announcement speaks for itself." It said he resigned "to pursue other interests."
Allen I. Questrom, Federated's chairman and ceo, could not be reached but a Federated spokeswoman said a successor will be named within a week to 10 days.
There was speculation Friday that Hal Kahn, former president of Montgomery Ward and a long-time senior Macy official, is a candidate to succeed Edelstein. "There have been many rumors about what I am going to be doing," Kahn said. "I will announce my plans in the next few weeks."
Edelstein reported to Allen I. Questrom and to James Zimmerman, president. "I had a very good relationship with the people at Federated," he said. Apparently, there was no bitter disagreement that sparked the departure. However, there were certain nettlesome issues over the last couple of years, among them, the division's slumping sales and its difficult merger with the former Jordan Marsh division, begun in March 1992. In addition, Edelstein reportedly did not see eye to eye with management's move to centralize merchandising through Federated Merchandising Services, based here, which was beefed up with "teams" of executives from all divisions jointly making merchandise decisions. The teams account for about 70 percent of Federated's buying. "He wanted to retain his independence," one source said.
The combined division is heavily concentrated in the Long Island and New England markets, which are sluggishly recovering from the recession. The merger, which involved closing the Jordan Marsh central office in Boston and cutting 500 positions there, has put a big strain on the Brooklyn organization. "Some of the stores are old, but A&S could be the jewel that will make Federated successful one day. It represents 20 percent of Federated's business," said one retail expert. "They may be spending too much time looking at Boston through Brooklyn. Boston requires different marketing plans, different assortments and different leadership." He added that the division incurs very high costs operating two downtown stores in New York, the A&S flagship in Brooklyn and the unit on 33rd Street in Manhattan. Operating costs in the New York area and New Jersey are higher than in other regions. On Friday, there was speculation that Federated felt it was time for new blood to pump up the 35-unit division, which has 17 A&S stores and 18 Jordan Marsh units.Edelstein acknowledged that the merger with Jordan Marsh has been "very difficult," but said A&S had "a very good year" and Jordan Marsh had "a pretty good year."
According to industry estimates, comparable-store sales at A&S/Jordan Marsh were down 3 percent in 1993, while Federated overall was ahead a couple of points. Federated's other divisions are Bloomingdale's, The Bon Marche, Lazarus, Rich's, Burdines and Stern's. In terms of operating profits, A&S, with an estimated 2 to 4 percent operating profit, is at the bottom rung of Federated. Rich's, based in Atlanta, has the highest profit rate.
Despite leaving A&S in a weak state, Edelstein has a strong reputation. He's considered a tough and instinctive merchant and is credited with helping the division pick up market share in the Eighties from other floundering department stores or retailers that folded. He is also credited with keeping the organization together through the Campeau takeover and subsequent Federated bankruptcy. Through it all, he maintained a consistent merchandise direction at A&S focusing on moderate to better prices, with a mix of contemporary and traditional fashion. Edelstein, 51, spent 16 years at A&S, starting in 1978 as a merchandising vice president and rising to executive vice president and general merchandise manger, before becoming ceo in 1985. Before A&S, he spent six years at Hecht's. He is a native of Israel.
A&S is a persistent price promoter, just like its major rival, Macy's, and that's been digging into margins at both chains. A&S is said to have trouble competing with Macy's in home goods, but not in apparel.
As reported, Federated is seeking to take over Macy's, raising many questions about how A&S would fit with Macy's.
There are now two major vacancies at Federated, though it's likely Federated has already narrowed down the choice for Edelstein's successor. The post of chairman of Federated Merchandising Services is still open as well. It was held by Roger Farah, who will join Macy's in July as president.
It's also possible that Federated will pluck from its own ranks for Edelstein's successor, moving a merchant such as Robert DiNicola, chairman and ceo of the Bon, or Matt Serra, chairman of Stern's, to A&S. Few see someone at A&S moving up. Leonard Marcus continues as president of the store. "You have to go to the outside, so you don't get someone who is the prisoner of the past," one observer said.
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