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Lundgren at Top of Retail Heap

NEW YORK — Terry Lundgren just expanded his own workload — and became king of the American department store in the process. <BR><BR>Once the merger with May Department Stores is consummated, Lundgren, chairman, president and chief...

NEW YORK — Terry Lundgren just expanded his own workload — and became king of the American department store in the process.

Once the merger with May Department Stores is consummated, Lundgren, chairman, president and chief executive officer of Federated, will be sitting on top of a $30 billion empire with 950 department stores and about 700 bridal and formalwear stores. He’ll have the difficult job of cutting out redundancies, transitioning regional stores to Macy’s units, integrating May personnel into the Federated fold and creating a cohesive culture for the combined corporation.

Those who know Lundgren said they’re confident the 52-year-old executive will handle it all with aplomb.

After all, Lundgren is affable and approachable, a motivational leader who can rally his troops behind a common goal. He’s been instrumental in pushing changes at Federated stores, such as turning over more regional units to Macy’s, improving top-line sales and helping make the decision to open a Bloomingdale’s unit in SoHo, which has been called innovative.

Lundgren was named chairman of Federated in December 2003 adding to his titles of president and ceo. He joined Federated for a second time in 1994 as chairman of merchandising operations. His first stint was in 1975 at the start of his career at Bullock’s, then a division of Federated.

Lundgren joined Neiman Marcus in 1988 as executive vice president of stores. Two year later he was promoted to chairman and ceo. His experience at Neiman’s gave Lundgren an intimate understanding of luxury retailing. But like his former Neiman’s boss, Allen Questrom, who went on to turn around Barneys New York and J.C. Penney & Co. before retiring, he knows that not every woman wants to spend $500 on a pair of shoes.

“He was passionate at Neiman’s about creating an upscale store that was accessible,” said Ron Frasch, chief merchant of Saks Fifth Avenue. Frasch was senior vice president and general merchandise manager of women’s apparel at Neiman Marcus, where he met Lundgren. “Terry’s always had a great understanding of the fact that not everyone spends their life buying designer products. It’s easy to become infatuated with the highest price points and highest level of fashion, but it takes a pretty smart guy to realize that people’s lives are a lot more balanced than that.”

This story first appeared in the March 1, 2005 issue of WWD.  Subscribe Today.

Lois Huff, senior vice president of Retail Forward, said Lundgren has been effective in articulating a strategy for Macy’s. “He does the job of a ceo, which really is to lead by example, and commands a level of respect that’s apparent,” she said. “Terry Lundgren has really spelled out exactly where Macy’s needs to head and what it’s going to take to get there. He has instituted real change.”

Lundgren is known for establishing clearly defined roles and responsibilities for his executives and giving them enough autonomy to do their jobs. At Federated, he built a team of five vice chairman who are responsible for finance and real estate; human resources; logistics; merchandising and private label, and stores.

His experience as a merchant was honed at Neiman’s and he used those skills to develop Federated’s successful private label brands, which include INC, Charter Club, Style & Co. and Alfani. May’s private label attempts have been less effective on the whole.

Russell Stravitz, who was chairman of Rich’s-Lazarus-Goldsmith when Lundgren was retooling Federated’s private label programs said: “Terry was able to build a consensus at a time when the company was less centralized. His style is to have a limited and powerful agenda and stick with it and work it. It’s important to have a management style that’s able to bring consensus. There’s lots of strong people pulling in the same direction.”

Hal Reiter, chairman and ceo of executive search firm Herbert Mines, noted that while Lundgren grew up in the industry as a merchant “he’s proven that he’s operating with both sides of his brain.”

While some vendors are privately concerned about the clout the combined Federated-May will have and the power it will wield, they sounded positive about the merger on the record.

“The Federated merchants are the best in the business and I think the merger creates an exciting opportunity for all involved, from the consumer to the vendor,” said Andrew Rosen, president of Theory. “Terry Lundgren is smart, creative and fair and has done a great job evolving Federated. He is absolutely an innovator. There are great possibilities.”

Frasch, who was in Milan on Monday, said he received a message from his friend Lundgren Sunday evening, telling him the deal was done. “I thought, ‘Isn’t it great that good guys can win.’

“Because of his wide popularity in retail and wholesale circles, a lot of hope rests on his abilities to energize the department store, which many in the industry consider to be a dying breed,” added Frasch.