Hal Kahn, the former chairman and chief executive officer of Macy’s East, has come out of retirement to become ceo of Steve & Barry’s.
Kahn is entering a challenging situation. The Port Washington, N.Y.-based specialty chain known for providing stylish celebrity-endorsed lines at low prices, such as Bitten by Sarah Jessica Parker, went bankrupt in July and was quickly bought out of Chapter 11 by Bay Harbour Management in August. The company is in the process of shuttering 97 of 270 stores, leaving 173.
The news was first reported on WWD.com Thursday afternoon.
As a veteran of running department stores, taking the reins at a specialty chain will be a new experience for Kahn. However, he is no stranger to tough situations. While at Federated Department Stores Inc., Kahn pulled off some difficult divisional mergers, including integrating the former Abraham & Straus and Stern’s divisions into the Macy’s group in the Nineties. He was instrumental in turning around Macy’s East in the aftermath of the bankruptcy of the parent company, R.H. Macy & Co., and takeover by Federated, which is now called Macy’s Inc.
Kahn was also on a mission to try to differentiate the merchandise at Macy’s and get better suppliers selling the store’s competitors to sell Macy’s as well, and was outspoken about the lack of newness and innovation on Seventh Avenue. He left Macy’s East four-and-a-half years ago.
In an interview Thursday, his first day on the new job, Kahn said Steve & Barry’s was an attractive assignment for several reasons. “Even though it’s a very difficult economy, Steve & Barry’s offers tremendous value to the consumer — apparel for men, women and children with celebrity entertainment names and a realistic and credible pricing structure, even though things have to be improved upon,” he said. “It’s not a highly promotional business. It’s more about offering value, day-in and day-out. This business ran into a cash problem, but it was a healthy vibrant business with a lot of great things going for it.”
The retailer’s bankruptcy took the industry by surprise. Its high-profile signing of celebrities to do collections and rapid expansion masked the operating issues. But it eventually became apparent the chain expanded too fast, seizing low-cost vacated spaces that landlords and malls were eager to fill, leading to some poor site choices.
After the bankruptcy filing, industry experts contended the Steve & Barry’s business model was flawed, operating with dirt-cheap prices and razor-thin margins that were squeezed by rising costs and tightening credit. There also were questions over how well some of the celebrity lines actually performed. The consumer slowdown this year compounded the situation. The company ultimately defaulted on a $197 million asset-backed loan from GE Commercial Finance Corporate Lending. The firm searched unsuccessfully for new financing and even held talks with Sears Holding Corp., among other parties.
Asked about the business model, Kahn replied: “Selling family clothing that is stylish at great value is fabulous.” He also said the sourcing is “incredible.”
Aside from Bitten, the store sells Dear by Amanda Bynes and Eleven by Venus Williams, as well as a group of TV-related brands from CBS Consumer Products. As one story goes, when basketball star Stephon Marbury saw Steve & Barry’s $10 basketball shorts and $12 jerseys, he decided to launch the Starbury Collection of basketball sneakers and apparel at the store. However, Kahn acknowledged, “Probably the prices on some goods represented excessive value when it should have been great value.”
Since leaving Macy’s, Kahn has served on boards and worked as a consultant. His name has surfaced several times as a candidate for a variety of retail positions that became vacant.
“If you are going to be in a business, and fix it, I’d rather be here, than in a higher-priced store,” in light of the country’s economic plight. Kahn said Steve & Barry’s still represents “a great opportunity.”
“Hal is extremely excited about this,” said Gilbert Harrison, chairman of Financo Inc., who has known Kahn for a long time. “He feels it has tremendous potential and he has not been as turned on as much about a project since the turnaround at Macy’s. It has tremendous potential. Steve & Barry’s appeals to a wide range of shoppers. Hal will bring order to the company.”
Kahn succeeds the founders and co-ceo’s, Steve Shore and Barry Prevor. A spokeswoman for Steve & Barry’s indicated Shore and Prevor will remain on the board.
A native of Brooklyn, Kahn began his retail career in the executive training program at Abraham & Straus in 1970. He joined R.H. Macy in 1975, rising to vice president of merchandising in 1979. In 1981, Kahn was named president of Macy’s former Atlanta-based Davison’s division, and four years later was named chairman of Macy’s California.
He returned to Atlanta in 1989 as chairman of the then newly formed Macy’s South-Bullock’s division, remaining in that position until 1992, when he left to become president of Montgomery Ward. He later returned to Abraham & Straus, and subsequently took the helm of Macy’s East.
From overseeing America’s fastest-growing speciality retailers to codifying cool, WWD talked to the women who are leading the way for the future of beauty. Check out our Instagram Stories to see how these women built today and are creating tomorrow. (📸: @hannah_khymych) #wwdbeauty
For @laperlalingerie's spring 2018 show, the brand chose to host their event at @thevenetianmacao. With Chinese megastars @bingbing_fan and @hubing in attendance, La Perla debuted a rock ‘n’ roll-inspired collection. The show marked the start of Sands Macao Fashion Week, which runs from October 19 to 24 — the city’s first such event. Pictured here are models backstage with glimmering eyes. #wwdfashion (📷: Cheuk-Yin To)
Trending for spring 2018: top stitch design. Gone are the days of stitch just for seams — designers are using the once-minimal detail to create strong decorative elements. (📷: Paola Testa; Styled by @andrew_shang) #wwdfashion
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)