NEW YORK — There are big changes ahead at Saks, Inc., starting at the top.
Stephen I. Sadove, Saks’ chairman and chief executive officer, and Ronald Frasch, president and chief merchandising officer, are both leaving the business in the wake of the Hudson Bay Co.’s $2.9 billion takeover, according to sources. An announcement is expected imminently, possibly Monday.
While Sadove has been expected to vacate Saks due to the deal, Frasch’s departure is more of a surprise, increasing the pressure on HBC to fill the impending management void at Saks.
Sadove’s golden parachute is worth close to $22.9 million and Frasch’s, $9.7 million. These figures do not include all of the executives’ Saks holdings, however.
Saks officials declined comment Sunday on any management departures.
HBC is considering not filling Sadove’s position once the acquisition is completed, but is expected to fill Frasch’s role. Richard Baker is chairman and ceo of the parent HBC and could fold Saks under his management umbrella. Names mentioned as possible successors to Frasch include Bonnie Brooks, currently president at HBC, operator of the Hudson’s Bay and Lord & Taylor stores, although she is not expected to shift to Saks, sources said, and has been taking a more behind-the-scenes role. Other candidates could include Marigay McKee, chief merchant at Harrods; Ginny Hershey-Lambert, former executive vice president of merchandising at Bergdorf Goodman, who left the retailer last year, and some of the top merchants at Lord & Taylor. Liz Rodbell is HBC’s top merchant, currently reporting to Brooks. Lord & Taylor recently named Stephanie Solomon, formerly of Bloomingdale’s, as fashion director.
Sadove and Frasch have been two of the industry’s most popular retail leaders. With their complementary skill sets — Sadove, the strategist with strong marketing, financial and people skills and point man to Wall Street; Frasch, the merchant with deep-seeded ties to brands and designers — the two worked well together. They typically appeared together at events, worked conference calls together and projected a harmonious working relationship. They guided Saks through some tough times, including the Great Recession, where the retailer’s steep markdowns rattled the vendor community. However, relations were quickly restored with vendors, and they have since revamped the merchandise, continued to weed out weak stores, rolled out Off 5th outlets, and rejiggered operations and responsibilities to take an omnichannel approach.
Saks’ performance has been up and down over the past decade, the stock has stagnated and profit targets have been elusive, though earnings have grown. The Sadove-Frasch team has managed to maintain the tony image of the Saks brand, through renovations, special events and designer appearances, and sustain the prominence of the Fifth Avenue flagship with its international appeal and audience.
Ultimately, they were successful in getting the business sold.
Last month, Frasch wrote a letter to vendors after the agreement was inked with HBC noting that Hudson’s Bay was attracted to the “Saks brand, our people, our real estate and store base, our loyal customers and our very special vendor relationships.
“Most importantly, they believe in the power of Saks Fifth Avenue and in the long-term growth potential of the business,” he said. “Our understanding is that HBC will continue to run Saks Fifth Avenue separately under their corporate umbrella and that Saks Fifth Avenue will remain headquartered in New York City.”
Frasch has a long career in merchandising. He began as a temp at Bloomingdale’s after college, taking returns in the men’s department. He became a Saks associate buyer for designer shoes, later a store manager, and, subsequently, a dress divisional merchandise manager. He was at Neiman Marcus from 1984 to 1994, rising to senior vice president and general merchandise manager and making his mark in the luxury sector, building the store’s designer and bridge businesses. He later became president and ceo of Escada USA, then president of GFT USA from 1996 until 2000. From 2000 to 2004, Frasch was chairman and ceo of Bergdorf Goodman before joining Saks again, as the store’s top merchant. When he was hired by Saks, he had a peculiar role, due to his non-compete contract at Bergdorf’s. Saks said he would be supervising private label and international operations for Saks Inc., given Frasch’s career experience in the luxury arena and his links to designers and suppliers. After 10 months, however, he was named vice chairman and chief merchant, responsible for the merchandising and planning divisions. His 10022-Shoe strategy has made a major mark on the industry, sparking footwear wars among leading department stores in different cities.
Sadove joined Saks in January 2002 as vice chairman and rose to chief operating officer two years later. He stepped up to ceo in January 2006, after turmoil at the department store ranging from chargeback investigations to rumors that the company would be sold. Sadove succeeded R. Brad Martin. Earlier, Sadove held posts of increasing responsibility with Bristol-Myers Squibb Co. between 1991 and 2001, including president of Bristol-Myers Squibb Worldwide Beauty Care and Nutritionals. Among other accomplishments at Bristol-Myers, he developed Clairol into a leading hair-care business and oversaw its sale to Procter & Gamble Co. for $4.95 billion. From 1975 to 1991, he worked at General Foods USA.
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