NEW YORK — The retail ceo landscape here continues to change.
Following management displacement at Saks Fifth Avenue and Bergdorf Goodman, Federated Department Stores Inc. said Tuesday that Hal Kahn, the 58-year-old chairman and chief executive of its Macy’s East division, will retire on Feb. 15. He will be succeeded by Ronald Klein, currently chairman and ceo of the Rich’s/Lazarus/Goldsmith’s-Macy’s, the Atlanta-based division of Federated.For the 55-year-old Klein, it's a return to Macy’s East, where he once served as vice chairman — and his biggest challenge. He has been chairman of the Atlanta division since July 2001.Federated also made several other announcements Tuesday, saying sales for January rose 5.5 percent on a comp-store basis, that the company was raising its earnings guidance for 2003 and the home categories have been centralized under a newly formed Macy’s home store division, based in New York. All home furnishings buying for all divisions, except Bloomingdale’s, will be made out of this central organization. Also, Michael G. Krauter, 46, currently executive vice president and director of stores at Rich’s/ Lazarus/Goldsmith’s-Macy’s, will assume a new position as president and chief merchandising officer of the Atlanta-based division. Krauter will join with David L. Nichols, who will remain as president and chief operating officer of the division, a position he has held since August 2000. No one has been named to the chairman and ceo slots.“The challenges for Ron are to pick up and continue the momentum created by Hal in parts of the stores that are working well, and to drive top-line sales,” said Terry Lundgren, chairman, president and ceo of Federated. “A very important part of that is to manage the transition of the new home store structure. The home business is extremely important, making that a high priority for Ron.” While Kahn’s move appeared surprising, his departure is seen as reflecting a desire by Lundgren to build a new team for the future. It also reflects some issues that Kahn, a brooding, independent sort, reportedly had personally and professionally, including Federated’s increased centralization. Recently the number of stores under his control was decreased when the Macy’s stores in the Atlanta area and in Florida were put under the supervision of the Burdines-Macy’s and Rich’s/Lazarus/Goldsmith’s-Macy’s regional divisions. Kahn has been running Macy’s East since 1994.“In the last couple of years, I made a change in my personal life [he separated from his wife] and I have been thinking about my professional life,” said Kahn on Tuesday. “I love Federated, the Macy’s brand and the organization. But I made a decision to leave and rethink my options, and I leave the company in good hands and in excellent condition. The profit performance has reached a level that I personally never thought it would reach.” Reportedly, Macy’s East exceeded 10 percent in operating profits. It also topped all divisions in total profit dollarsin 2003, which is less surprising since it is the largest of Federated’s divisions. However, sales were hurt by lousy weather, but better merchandising into higher margin businesses, expense reductions, margin control and stock balancing pushed up the bottom line.“My contract was up, I made the decision a while ago to finish the year and this is not a surprise to me or anyone else at Federated,” said Kahn. “The complexity of the job wouldn’t have been as great in the future as it was in the past. I want to take on another challenge.” “Hal is a talented merchant and I doubt if this is his last stop. If he wants to work, he will wind up in something special,” said Robert Kerson, the executive search consultant. “Being a top flight Macy’s merchant means having good fundamentals — buy it, sell it, promote it.” Kahn is also credited with pulling off some difficult divisional mergers at Federated, including integrating the former Abraham & Straus division and Stern’s into the Macy’s group. He has been on a mission to try to differentiate the merchandise at Macy’s and get better suppliers selling competitors to also sell Macy’s.Lundgren did say he had numerous discussions with Kahn about Macy’s southern stores integrating into the regionals, adding, “The stores were competing head-on against each other. It didn’t make a great deal of sense that way.” The Atlanta stores were integrated a year ago; Florida in the past few months.Klein has long been regarded as a rising star in the Federated organization and has a strong background in men’s wear. “He’s very bright. He’s a good manager of people. He’s objective and clear and tells it like it is. Everybody I have spoken to likes to work for him,” said Elaine Hughes of E.A. Hughes & Co. executive search.With more than $4 billion in volume and 104 stores, Macy’s East is by far Klein’s largest assignment, where he will be faced with serious challenges, including how Macy’s continues to differentiate and upgrade its merchandise, improve top-line growth, which has been difficult, continue to wean itself off the vicious cycle of price promoting, provide better service, and integrate the new home store central structure.
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