By  on August 24, 2005

NEW YORK — George Jones, president and chief executive officer of the Saks Department Store Group, will resign on Sept. 30, suggesting that parent Saks Inc. may be close to selling what remains of the unit.

Saks Inc. sold the southern portion of the group — Proffitt's and McRae's — for about $620 million to Belk Inc. in July, leaving the 180-unit northern portion. The northern group, consisting of Carson Pirie Scott, Younkers, Herberger's, Bergner's and The Boston Store, is up for sale. Saks Inc. also intends to sell its Club Libby Lu girls' specialty division.

The Saks Fifth Avenue and Parisian divisions of Saks Inc. are not for sale officially, but people familiar with the situation have indicated that the parent company is considering exiting those, as well.

The company received bids for the northern group this week, said a person who asked not to be identified. The offer has been extended because bidders are said to be interested in the Saks Fifth Avenue division of Saks Inc., complicating the situation. Saks Inc. declined to comment.

Jones' departure is the second of a high-level Saks executive in a week. James Scully, former executive vice president of strategic planning and human resources, joined J. Crew last week as executive vice president and chief financial officer, succeeding Amanda Bokman, who resigned in June.

Jones joined Birmingham, Ala.-based Saks Inc. in March 2001 after a seven-year stint at Warner Bros., where he served as president of worldwide licensing and Studio Stores. Before that he worked for Target, Rose's and Dillard's. At Saks Inc., Jones had the Proffitt's, McRae's, Parisian, Carson's, Club Libby Lu and private brand organization reporting to him.

"For the middle market, he made some good choices," said one former colleague, who asked not to be identified. "But there was never enough money to advertise and market the products."

Saks Inc. spokeswoman Julia Bentley said Jones was exploring new job opportunities and that his decision to leave was appropriate for both him and the corporation in light of the decision to explore strategic alternatives for the northern group.Toni Browning has been named president and ceo of Parisian, taking over for Jones, who had direct supervision of the 41-unit division since 2003. Browning was president and ceo of Proffitt's and McRae's. She held jobs of increasing responsibility with Younkers between 1993 and 1997, including senior vice president of stores. She previously had store and merchandising jobs at Dayton Hudson Corp. and Federated Department Stores. In her new role, she will report to Steve Sadove, Saks Inc. vice chairman and chief operating officer.

The $2.2 billion northern group is led by Michael R. MacDonald, chairman and ceo, while Club Libby Lu is headed by Mary Drolet, president. MacDonald and Drolet also will report to Sadove, effective Sept. 15.

Jones is considered an innovative merchant and is credited with updating the Saks Inc. department stores with new shops, amenities and food services, and, in particular, giving many of the stores some distinctive merchandise and service features. But the past couple of years have been tough for the regional operation, considering the dominance of larger chains, such as Federated, Wal-Mart and J.C. Penney, and even Belk's, another regional that has been lately performing better than the Saks department stores.

He tried to revive his regional group, even visiting Selfridge's in London to get inspiration and ideas for Saks merchandising concepts. In August 2004, Jones launched a prototype, 160,000-square-foot Younkers in the Jordan Creek Town Center in Des Moines, partly a response to the "reinvent" strategy launched by rival Federated Department Stores three years before, which features new technologies and amenities.

Among the features at the Younkers store were a pharmacy with natural health products; a wine bar; a demo kitchen; an outdoor light display; plasma-screen TVs; living room-like areas, including a fireplace in the men's lounge; a spa, and singing sales associates. Advances at Younkers were later incorporated to certain Proffitt's locations.

Jones also pushed private label, which, during his tenure, rose from under 12 percent of the total volume to 17 percent last year. Several exclusive brands were added to the mix, including Jane Seymour home and kids' products, Laura Ashley home goods and Ruff Hewn apparel.Saks Inc. has not yet reported its second-quarter performance because of government and internal investigations into certain of the company's chargeback and accounting procedures. While financials dating to 1999 might be restated, the department store group posted operating income of $157.8 million last year compared with $180 million in 2003. In 2004, comp sales grew 1.6 percent.

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