NEW YORK — Sears, Roebuck & Co. Tuesday switched the top management of its struggling apparel business — once again naming an executive from a successful clothing company that it just happens to own.
Reaching into its Lands’ End division, Sears named Mindy Meads executive vice president of softlines, succeeding Kathryn Bufano, whose last day at the department store was Monday.
Bufano’s departure was sudden, considering she served as the chain’s top apparel and soft home executive for just 14 months. It reflects management discontent with how the new Sears apparel program was progressing, weak sales and a desire by Mark Cosby, who joined Sears last December as president of full-line stores, to reshape the team. In another executive change, Cosby named Bill White, who ran Sears’ automotive division, vice president of store operations, replacing Mary Conway.
The management shakeup is further indication of the growing pressure on Sears, which has announced it is examining the possible sale of all or part of its credit business and would then focus entirely on retail. The problem is that the retail division has been struggling for years to find a formula for growth, especially in apparel, which hasn’t clicked for years.
Bufano, who reported to Cosby, had been orchestrating an overhaul of Sears apparel offerings, including launching the private label, Covington, program last year, integrating Lands’ End into the assortment and eliminating dozens of private labels that for years have meant little to Sears shoppers.
Bufano also was one of the main forces pushing for the Lands’ End deal, which was completed last June for $1.9 billion.
Lands’ End continues to design its products, while Sears buys the line as if Lands’ End were a wholesaler, with Bufano leading the buying efforts. Sears has been trying to get customers who buy its more successful hard-goods lines, with such popular brands as DieHard, Craftsman and Kenmore, to also shop its apparel offerings.
Aside from introducing Covington, Bufano led efforts to pump up Canyon River Blues, another proprietary brand, by introducing tops to go with the denims and bottoms, launching big-and-tall shops, creating open-sell areas and reorganizing men’s wear by classification. Softlines consume 40 percent of the floor space in Sears’ doors, produce 40 percent of the sales volume, but only attract about 30 percent of the customers.
Bufano, who is 50, may have also had trouble integrating into the Sears culture, which compared with Macy’s East, a previous employer, would be considered much slower moving in the fashion arena. At Macy’s, Bufano served as executive vice president of women’s apparel. She was briefly president and chief merchandising officer at Dress Barn Inc. prior to joining Sears.
However, Sears has put Meads, who is 51, in an even bigger role than Bufano had. Meads was executive vice president of merchandising and design at Lands’ End, but will continue to head up merchandising for both Sears and Lands’ End. She reports to Cosby. Continuing to report to Cosby are Lyle Heidemann, hardlines, and Gus Pagonis, senior vice president of supply chain management. Before his position at Sears, Cosby was chief operating officer at KFC, USA, leading company and franchise operations for the 5,300-unit restaurant chain, formerly known as Kentucky Fried Chicken.
“Mark is shaping his team,” said Jan Drummond, a Sears spokeswoman on Tuesday. “He’s put in some time now at Sears, surveyed the landscape and is busy establishing and executing his priorities.”
It’s not the first time Sears has tapped Lands’ End for executives. Last December, Bill Bass, who was Lands’ End’s senior vice president of e-commerce, was named vice president and general manager of catalog and Internet operations. Also, Jeff Jones, who was chief operating officer at Lands’ End, became senior vice president and general manager of Sears’ Great Indoors home chain. David Dyer, who was ceo of Lands’ End prior to its acquisition, continues in that role and has the additional title of executive vice president and general manager of Customer Direct.
Exclusive of special items and securitization income, fourth-quarter operating profits at the firm’s retail business rose 9.7 percent to $726 million from $662 million in the year-ago quarter. Sales were up 2.8 percent to $9.73 billion, from $9.47 billion. Without Lands End, the firm’s retail revenues fell 4 percent. Comparable-store sales slid 7.3 percent, with a high-single-digit decline in apparel.
“Who, exactly, acquired whom?” quipped an investment banking source familiar with both firms. “This is beginning to look like a reverse acquisition, but Sears also acquired a lot of good talent when it bought Lands’ End.”
With all the executive changes at Sears, further strategic changes in the store presentations are likely. The verdict remains out on Covington, although Sears is continuing with it for fall, while the rollout of Lands’ End, purchased last June, goes on. It now is in about 400 of Sears’ 870 department stores. Lands’ End is expected to be sold at all of the full-line stores by next fall, but reportedly there has been some concerns about whether it’s being effectively presented in the stores, or whether it lacks punch. Some think it should be a strong focal point, with all the Lands’ End merchandise across men’s, women’s and kids contained in one area or shop. Currently, it is dispersed on the apparel floor, though located near entrances and readily visible. Changes in the presentation are expected.
At the store operations level, there have been significant changes, involving shifting responsibilities, shifting to self-service in footwear and apparel, centralized cash wraps, new signage and consultative sales staff being retained in appliances, electronics and home improvement.
While there has been speculation that the private Covington brand hasn’t gone over as well as hoped among consumers, the Sears spokeswoman said, “My understanding is it has been well received by customers. We deemed it a successful rollout.”
“Mindy is talented, bright, product-oriented and a strategic merchant,” observed Kirk Palmer, who runs an executive search firm bearing his name. “She understands both branded and private label product, and presided over nice growth at Lands’ End.” Before Lands’ End, Meads worked at Limited, Gymboree and Macy’s. She is said to be very focused, buttoned-up and without being flamboyant or emotional on the job.
Others described Bufano as a hard-driving apparel executive, which Sears isn’t used to, who didn’t bring in much talent and ruffled some feathers in her quest to put some verve back into the assortments. “There were not a lot of people rallying around her,” said one source.
“This was an unceremonious divorce,” said another source. “I’d say the company is flailing a little bit right now.”
The worst of the flailing has concerned its credit operations, which were the proving ground for Sears ceo Alan Lacy and also presented him with the biggest crisis of his tenure in that post. Last fall, Lacy informed Wall Street that the head of the credit unit had been dismissed and that it would need to increase its provision for delinquent accounts. Still, it generated more than $1.5 billion in comparable operating income for Sears last year and sported $30.8 billion in receivables.
On a conference call with analysts in January, Lacy noted that Covington, since its September unveiling in stores, brought in sales of more than $200 million. Lands’ End will be in about 400 of Sears’ 870 full-line stores this spring, and across the whole chain in the fall.
Sears also has had to make some moves to tighten its belt recently. In March, the company said its cost structure would be overhauled at the cost of jobs at its Hoffman Estates, Ill., headquarters. While exact numbers are not known, the reduced head count is expected to be finalized by the end of May.
Shares of Sears dipped 17 cents, or 0.7 percent, on the New York Stock Exchange Tuesday to close at $25.30. Over the last year, the stock has traded as high as $59.90 and as low as $18.25.