NEW YORK — Allen Questrom’s charisma, Millard Drexler’s merchandising skills, Leslie Wexner’s thoughtfulness and Rose Marie Bravo’s leadership.
Is it possible to find all these qualities in one person? Maybe not, but given some of the toughest retail conditions in years, the sluggish economy and the threat of war, some retailers certainly hope so. From Wet Seal to Gap, Parisian to Ann Taylor, executives once thought capable have been shown the door and new ones have been brought in to work their magic. The problem is, there is a shrinking pool of magicians.
The task is more challenging than ever as business pressures increase daily along with complexity. Logistics, merchandising, marketing, human resources, property and, in some cases, global expansion are just a few of the balls a retail chief executive officer has to juggle these days — not to mention satisfying the increasingly impatient Wall Street. Where once a ceo could grow into his or her role — in many cases working their way up through the executive ranks — and gradually mold the business into their vision, these days a few bad quarters can mean they’re out and another executive is in.
The ceo criteria has shifted. For today’s ceo, a track record of problem-solving and experience, preferably as a merchant, count the most.
“The day of nonretailers running major retail companies has passed,” said Robert Kerson, managing director of the global retail practice of Korn/Ferry executive search. “The most important trait you need to have is retail experience. That sounds simplistic, but too many don’t have it.
“Look at the major retailers who are fighting survival battles. They’re basically companies being run by people without true retail experience. Good management skills from one industry don’t easily translate to retail, where you have to have a long-term strategy, which has got to be tweaked and changed rapidly because the competition is so much keener and always changing. You’ve got to be able to face competition on a daily basis.”
Yet several big retailers with serious issues, such as Sears, Roebuck & Co., Gap Inc., Sam’s Club, Ann Taylor Stores Corp. and Kmart Corp., have opted for ceo’s who are financial or operations executives at heart, to restructure the business, clean up the balance sheet and hopefully, redirect the stores and merchandise.
This story first appeared in the February 20, 2003 issue of WWD. Subscribe Today.
For Alan Lacy at Sears, Paul Pressler at Gap, J. Patrick Spainhour at Ann Taylor, and Julian Day at Kmart, the verdict is still out. They don’t make the WWD All-Star team of retail ceo’s, a list compiled with the assistance of executive search professionals and consultants. It’s a subjective collection, based on having at least a few outstanding abilities and a demonstrated track record of solid performance, with some retired executives getting honorable mention. (Apologies in advance to those who didn’t make the cut. Maybe next time.)
On the current starting lineup:
Allen Questrom, J.C. Penney: The Mr. Fixit of the industry, he’s considered charismatic, draws smart people to his ranks and empowers them. He’s reenergized Penney’s with a long-term strategy with realistic expectations for a turnaround. Previously, he rebuilt Federated Department Stores from the ashes of bankruptcy with megamergers, then had a short stint at Barneys New York, which he helped stabilize after its bankruptcy.
Mickey Drexler, J. Crew: A hands-on, visionary merchant, with a pulse on the consumer and a creative passion. He made Gap into the uniform of America and built it into one of the world’s best-known brands, but operationally fell short by opening too many stores and building up other brands that cannibalized each other. Gap’s two-year decline in profits was one reason he had to step aside.
Michael Jeffries, Abercrombie & Fitch: He reinvented A&F, after years of lacking identity, by methodically pursuing hard-to-hold customers — teens and those in their 20s. The business is his vision.
Gordon Segal, Crate & Barrel: A master of product and presentation and a classic merchant, he created a store environment that draws people in and a chain with consistent quality merchandising and assortments from door-to-door.
Leslie Wexner, Limited Brands: One of the industry’s few deep thinkers, he’s been a pioneer in creating specialty brands, some from scratch and others built out of minute businesses, with a vision and focus for each. He also gets credited for some shrewd financial maneuvers, notably business spinoffs, stock maneuvers and restructurings, and has kept Limited on solid financial footing, even when the apparel segment tanked.
Michael Weiss, Express: One of the few merchants that has endured for decades at the parent, Limited Brands, he’s got fashion flair and leadership skills with a vision for the brand and an ability to communicate it to his workers so they are motivated into action and constantly updating. Fast-fashion is his baby.
Rose Marie Bravo, Burberry: She reinvented the plaid into a happening wholesale and retail brand and is always near the top of executive search lists when big vacancies arise. But for now at least, she’s wedded to Burberry with a huge personal stake. Bravo is considered a strong leader, well liked, an outstanding, aggressive merchant with great taste and is credited for adding elegance to Saks Fifth Avenue, where she was once president.
The Kohl’s team, including Larry Montgomery and retirees Jay Baker and William Kellogg: The company continues to demonstrate an ability to grow rapidly and profitably, bringing it into new markets, where it almost always plays well. It also sustains shareholder value. Kohl’s has a retail model that other retailers fear and try to emulate.
Greg Weaver, Pacific Sunwear: Considered a visionary, he built the chain into a major national business, and is said to have a tight grip on his target customers. He lives the lifestyle.
Lee Scott, Wal-Mart: Charismatic, with a modest air, he has a broad skill set, from logistics and distribution to merchandising, and has perpetuated the Sam Walton culture and rapid growth of the world’s largest company, while cautiously exploring new formats for stores and merchandise, and going after acquisitions.
Marvin and Helene Gralnick, Chico’s: They seized a niche and have yet to let go, with a steady vision and good product skills. “You’ll never see a pair of fitted Lycra side-slit pants there,” said a source, for their baby-boomer and older customers. It’s also one of the better chains for service.
Lew Frankfort, Coach: Great focus, great understanding of the customer and leadership. He’s established Coach as perhaps the world’s top accessories brand.
Marvin Traub: The former Bloomingdale’s impresario/chairman, now a partner in Financo Inc., Traub made Bloomingdale’s into an internationally known nameplate, then reinvented himself into a consultant with a hand in all sorts of businesses. He just keeps going.
And on the links, but having demonstrated the qualities a retail ceo should have:
David Farrell, May Co.: One of the best executors in the business, he immersed himself in the stores with his tough hands-on style, and got things done, even if it meant being in the stores at 2 a.m. During his tenure, May Co. spewed out sales and profit gains that were the envy of the industry. He set the trend for retail mergers, pulling off one of the first big ones when May Co. bought Associated Dry Goods in the mid-Eighties, getting Lord & Taylor in the process.
Ben Cammarata: A strong merchant who formerly ran TJX Cos., the nation’s largest off-pricer, where he executed one of the smoothest major retail mergers ever, combining Marshalls into T.J. Maxx and keeping the entire business on track for many years.
Arthur Martinez, former Sears ceo: A financial wiz, decisive and not afraid to bite the bullet; Martinez had Sears, Roebuck in full turnaround, and probably saved the business. When Sears started to slump again, he couldn’t hang onto his job.
Ira Neimark: Former chairman and ceo of Bergdorf Goodman and suitably dapper for the part, he falls into that merchant-showman category, who lived the business, made it his lifestyle and was connected to the community and accessible to the merchants.
Edward Finkelstein: Former Macy’s chairman, he was a true retail showroom, with a vision for creating new store concepts, including The Cellar and private fashion brands, and special events. But a leveraged buyout and some West Coast acquisitions put the business in bankruptcy and short-circuited his tenure.
Finkelstein may have gone down due to some strategic mistakes, but even less serious turnaround situations can take someone down these days. Shareholders and boards just aren’t as patient as they’ve been in the past.
“The time allotted for turnarounds has definitely gotten shorter,” said Kathy C. Yohalem, a principal at Tait Advisory Services LLC. “There are a lot more metrics for success in place and methods for control, with milestones such as sales, earnings and return on investment, that these ceo’s are going to reach within certain periods of time. I don’t think anyone in the business world expects somebody to turn around a business in one quarter or two quarters, but there will be many more specific milestones put in place quarter by quarter to achieve at the end of 12 months what needs to be done. It’s about time. Things have been just a little bit too loose.”
Arnold Aronson, managing director of retail strategies, Kurt Salmon Associates, believes the recent turnover in the executive suite reflects the pressures and “impatience” of Wall Street, but also “a shortsightedness that will come around and bite you. Unless the person has been patently a nonperformer, I believe in the long run, executives who have sound business plans and are able to execute within the organization have got to be given appropriate time.”
According to Elaine Hughes of E.A. Hughes & Co. executive search, problem-solving skills are critical. “But there are various retail models, the vertical model, the department store model, the mass merchant model. You can be a good problem solver at one model, but not necessarily at another. The model is flawed at Ann Taylor. It’s a specialty store model with a brand that lacks a definite point of view.” With Kim Roy getting axed from the Ann Taylor Stores division last month, “they need somebody with a vision of what that brand should be.”
Another problem today is simply the small pool of talent. Years ago, executives gradually worked their way up the ranks of such stores as Macy’s or Abraham & Straus and, perhaps, one day became ceo. Today, though, some ceo’s are reluctant to promote people to ensure they get all the plaudits. The result is not enough delegation and a ceo spread too thin to handle the complex business. “How many people have the ability to hire someone who is smarter than themselves, or who really wants to hire very smart people?” one source said.
“It’s not a matter of just being a great merchant,” added Bill Maher of Maher/Kanal Associates search firm. “Retailers today must put together a vision of what the business should be and be able to execute that plan. That’s a tough road to hold. Few retailers out there today really have vision, are great leaders and motivators.”
So the search for the magician goes on.