NEW YORK — In a surprising move Thursday, Christina Johnson resigned as president and chief executive officer of Saks Fifth Avenue Enterprises.
Johnson had been in the role since February 2000 and was responsible for stores, catalog, Internet and outlets. She couldn’t be reached for comment, but the company said she stepped down to devote more time to family matters.
This story first appeared in the October 24, 2003 issue of WWD. Subscribe Today.
R. Brad Martin, chairman and ceo of Saks Inc., parent company of Saks Fifth Avenue, said in an interview that Johnson’s successor has already been selected, but that person “has some responsibilities he or she needs to finish up,” and the current employer has requested that person’s name not be released until December. Martin said the successor will assume the role in January 2004. In the interim, Steve Sadove, vice chairman of Saks Inc., will assume day-to-day leadership of the SFAE organization.
According to sources, Saks didn’t use an executive search firm to find its new ceo, and Martin sent a note to industry executives Thursday saying it found an “outstanding leader.”
Speculation was rampant, both within and outside Saks, on who that leader might be, with most of the conjecture zeroing in on Howard Socol, chairman and ceo of Barneys New York, and Fred Wilson, ceo of Donna Karan International, a unit of LVMH Moët Hennessy Louis Vuitton.
In addition to having the luxury experience from Barneys, Socol is best known for his successful career running Burdines, the Miami-based division of Federated Department Stores, where he spent 28 years. Socol, whose contract at Barneys runs through Jan. 31, 2005, didn’t return a phone call seeking comment.
Wilson, who is in the process of trying to turn around Karan’s business, was previously president and ceo of the LVMH Fashion Group, prior to which he was ceo of LVMH Specialty Store Retailing and president and chief merchandising officer at the firm’s DFS Group Ltd. He began his career at Federated Department Stores in 1969.
“Our company policy is we do not comment on rumors,” said a spokesman for DKI, when asked about Wilson.
Faced with disappointing financial results and difficulty in keeping key executives, Johnson’s departure was inevitable and only a matter of time, sources believed. Russell Reynolds Associates, the executive search firm, had been searching for a new head merchant since June, but sources said the problem was that bringing in a heavy-duty top merchant would require making him or her ceo.
“Tina made terrific contributions over a 12-year career, rising from store manager through the president’s and ceo job,” Martin told WWD. In addition, he said over the past four years, SFAE improved its merchandise planning and allocation systems; enhanced customer service levels; improved store design, and strengthened the store base through opening, remodeling and closing key stores.
But the need for a top merchant became increasingly evident following the departures of two key executives: Gail Pisano, executive vice president of merchandising for women’s designer and Gold Range merchandise, intimate apparel, jewelry and accessories, who left the company in July, and Wayne Meichner, Saks’ other executive vice president for merchandising, who handled men’s wear, cosmetics and ready-to-wear and who left the store in May 2002.
In addition, Saks was shaken by several key departures in the past several months. Most recently, Barbara Cavanaugh, vice president for private label product development, resigned to join Kellwood Co. In July, Eileen Warner, a 25-year veteran of SFA, who held the title of vice president and divisional merchandise manager over handbags and accessories, left to join Isabel Fiore, the handbag firm, and Sal Lenzo stepped down as visual director.
Bobbie Lenga, partner and managing director of the retail practice at Russell Reynolds Associates, has been conducting the search for the head merchant.
“I was searching for president of merchandising, and we didn’t find that person. It was put on hold,” said Lenga Thursday. She said she didn’t know whom Saks has chosen to succeed Johnson, but added: “They’ll pick a phenomenal merchant for that role. Saks Fifth Avenue is a very desirable marquee brand, and it takes a certain individual for that role. They need a phenomenal merchant, as well as a great leader.”
Lenga believes that Johnson also will be sought after.
“She will be highly desirable in another role. She’s a phenomenal executive. She has so many fabulous assets and brings tremendous strength to an organization. She’s tough, but she’s very fair. Her expectations for herself are no different than what she has for others,” said Lenga.
Harry Bernard, executive vice president and chief marketing officer at Colton Bernard, the San Francisco-based consulting firm, believes Saks should be run by a top merchant. “She was, rightly or wrongly, the person who couldn’t hold it together at Saks. Most fashion companies should be led by a merchant. She’s had some great difficulty in her people-management skills.” Those two things, combined with her financial performance, made it inevitable that Johnson would lose her job, he believes.
Robert Kerson, a longtime search consultant who is on sabbatical and will announce his plans in January, said the ceo role at SFA is untenable.
“I think Tina is a very smart and capable executive. She’s strong, decisive and strategic. The role of ceo is going to be difficult and may not be doable unless the organizational structure is changed. The job will be a revolving door unless the person is allowed to function without a lot of interference. Tina will land on her feet. The organizational structure doesn’t make a lot of sense. The question is who’s running the company, and there are many cooks in the kitchen.”
During Johnson’s tenure, Saks Fifth Avenue undertook a major initiative to present a clearer luxury identity and to reach a broader customer base. In addition to spearheading Saks’ ongoing $100 million renovation at the flagship, the company refocused its private label offerings more to Baby Boomers, built up its contemporary assortments and expanded its selection in the “gold range,” including such brands as Peter Cohen, Max Mara and Piazza Sempione. In addition, Johnson updated its assortment in fine jewelry and accessories by dramatically increasing its number of luxury resources, with the aim of going head-to-head with Neiman Marcus and Bergdorf Goodman.
Last December, Johnson unveiled a new accessories concept on the flagship’s main floor featuring a mix of upscale designer merchandise such as Fendi, Marc Jacobs, Lambertson Truex and Coach, and luxury leather goods shop-in-shops from the likes of Louis Vuitton, Prada, Christian Dior, Burberry, Salvatore Ferragamo and Bottega Veneta. Saks’ flagship also relocated and renovated its fine jewelry area, adding a slew of luxury jewelers to its assortment, including Cartier and Graff. It now features a separate entrance and fine jewelry and watches from the likes of Corum, Tag Heuer, Chopard, Bulgari, David Yurman and Roberto Coin. Saks scored coups when it opened Cartier’s first store-in-store offering its jewelry and watches, and becoming Graff’s first — and only — wholesale account.
Joining Saks Inc. in 1991, Johnson rose through the ranks primarily through the store operations and selling side. She was named vice chairwoman in September 1998, adding the chief operating post in May 1999. In November 1999, Johnson was named president and ceo of the Saks Fifth Avenue division. As ceo, she succeeded Philip Miller, who continued as chairman. The president’s title had been vacant since Rose Marie Bravo left Saks in 1997 to run Burberry.
Analysts believe Saks has underperformed compared with its competitive set and was ripe for management change.
Robert Buchanan, an equity analyst for A.G. Edwards, said in a research note Thursday, “Potentially, this is a positive development depending on who ultimately is named to the top post. For too many months SFA has appreciably underperformed its peer group, including Neiman Marcus.”
He added: “Our field research has consistently pointed up dull merchandising, including a lack of originality, as well as a homogeneous offering from store to store, meaning next to no micromerchandising by store. In a broader sense, [Saks Inc.’s] returns on sales and investments remain lackluster and need to appreciably improve for the stock to outperform.”
Over the last year, half of Saks Fifth Avenue’s monthly comparable-store sales reports have been negative. While that means the chain registered positive comps for the other half of the year, the down side has been more negative then the up side was positive. The lowest lows were drops of 11.4 and 8.6 percent in February and March, respectively, while the highs were 6.3 and 6.5 percent advances in April and July, respectively.
The chain was only able to best Neiman Marcus on a comp basis during two months out of the last 12. During September, SFA’s comps pushed up 1.2 percent while Neiman’s shot ahead 13.6 percent. However, sources said SFA’s numbers have recently been trending upward.
During the second quarter ended Aug. 2, the SFA chain posted operating losses of $22.1 million. This compared with a deficit of $13.8 million a year earlier. Sales ticked up 0.9 percent to $486.3 million.
By comparison, Neiman Marcus Group in its fourth quarter ended on the same day saw operating earnings rise 64.5 percent to $16.6 million while sales advanced 5.4 percent to $702.7 million.
Ron Frasch, chairman and ceo of Bergdorf Goodman, said, “I feel badly for Tina. It’s a tough industry and you have to perform. All of us are comrades, and you hate to have anyone lose their job for whatever reason.”
Industry executives were stunned to hear of Johnson’s departure.
“I am in total shock; no one had told me anything about it. I liked her, we got along really well and our business with Saks was very strong, so I will certainly miss her,” said Oscar de la Renta.
“I am sorry to see her leave,” said Henri Barguirdjian, president at Graff. “We had a few meetings with her to discuss our plans for growth, and she was always very aware of what was going on with our business.”
Designer jeweler David Yurman said Thursday, “Tina was incredibly supportive of the Yurman business and we’ll miss her.”
James Ammeen, chairman and ceo of Halston, added, “I think she was a positive force at Saks Fifth Avenue. She understood retailing as a merchant and it was good to have a merchant in that spot. She was issue oriented and raised the profile of the store and I wish her the best. In terms of the company, I have the utmost confidence that Brad Martin and Steve Sadove will carry out a smooth transition.”
Christian Knaust, president of Carmen Marc Valvo, noted, “We worked with her quite a lot and I really liked her. I thought she was very professional and I think she really cared. She made an effort of trying to build our business up. Our business with Saks increased when she came on board.”
St. John Knits International Inc.’s co-chief executive, Kelly Gray, said, “Whatever the case, I feel like Brad Martin will ensure the success of Saks Fifth Avenue’s future.”