By  on August 20, 2007

Women's apparel retailers can't hold onto their executives, which could hamper ongoing turnaround efforts as the sector grapples with sagging sales.

In the past six months, the chief financial officers at AnnTaylor Stores Corp., Coldwater Creek Inc. and Chico's FAS Inc. have all resigned.

"It seems as though there have been more cfo and merchant changes now than in the recent past," said Roxanne Meyer, specialty retail analyst at CIBC World Markets. "So many women's retailers have been a turnaround story. These management changes may be a signal that the turnarounds are not on target."

AnnTaylor Stores Corp.'s chief financial officer and executive vice president James Smith resigned Aug. 10 to "pursue other interests."

Smith, who has been with Ann Taylor for 14 years, said he will remain at the company until the end of September or until they find a replacement.

"Given that Ann Taylor currently doesn't have a chief operating officer position, we think it will be critical to fill the cfo spot with a seasoned executive from a medium-size or larger company within the retail space," Meyer said in a research note. "Ideally, the new cfo will not only be financially savvy and street-friendly, but also will understand organizational complexity and have some operational experience."

While Ann Taylor said it expects to fill the cfo spot by next month, Chico's has not set a time frame. Late Friday, Coldwater Creek announced that Timothy Martin was promoted to cfo from vice president, finance, after Mel Dick announced he would step down from his post effective Sept. 1. Martin will continue to serve as Coldwater Creek's principal accounting officer.

Wall Street has had a mixed reaction to these managerial shifts. "When Talbots announced Trudy Sullivan as their new ceo, the market reacted favorably because the change had been a long time coming," Meyer said.

But shares of Ann Taylor fell 3.5 percent to $28.44 on Aug. 10 after the announcement of Smith's departure.

With the recent volatility of the market, however, it is unclear if the announcement was the catalyst for the stock price decline, Meyer said.

Besides their cfo's, these apparel companies have also lost some of their top leaders and general merchandising managers.Chico's FAS Inc. recently announced the appointment of Donna Noce Colaco, former president of Ann Taylor Loft, to the head of its White House|Black Market division.

Colaco left Loft in January, replacing Patricia Darrow-Smith, who was one of the founders of White House|Black Market in 1985 and had been with Chico's since the company bought it in 2003.

Ann Taylor Loft is still looking for Colaco's replacement. And last week, executive vice president and chief marketing officer Elaine Boltz was said to have resigned from Ann Taylor, according to several news reports.

Plus-size specialty retailer Charming Shoppes Inc. recently hired LuAnn Via, former president of its Catherines division, as head of Lane Bryant. The former president of the division, Lorna Nagler, left the position in June to "pursue other career interests." Charming Shoppes is seeking a president for the Catherines division.

These departures and turnovers come at a time when the Baby Boomer sector at specialty has been struggling.

"I think this [management change] is a reflection of two very, very tough years in the specialty women's apparel space, where we have seen continued earnings misses," said Eric Beder, specialty retail analyst at Brean Murray Carret & Co. "Managements are searching for the next 'magic elixir' to revive growth in the space."

While the space is still underserved, sales and traffic have been down at most of the major players, Meyer said.

Ann Taylor reported a 5 percent drop in last month's same-store sales, while Chico's saw a 6.7 percent drop.

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