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Macke to Exit Dayton Hudson; Ulrich is Named as Successor

NEW YORK -- In a move that took some analysts by surprise, Kenneth A. Macke, chairman and chief executive officer of Dayton Hudson, said Thursday he will retire in July. Macke is 55.<BR><BR>He is being succeeded by Robert J. Ulrich, chairman and ceo...

NEW YORK — In a move that took some analysts by surprise, Kenneth A. Macke, chairman and chief executive officer of Dayton Hudson, said Thursday he will retire in July. Macke is 55.

He is being succeeded by Robert J. Ulrich, chairman and ceo of DH’s Target division. Ulrich has already assumed the ceo title and will take over as chairman in July. Target is the company’s largest division and the nation’s third largest discounter, behind Wal-Mart and Kmart.

“After 11 years as ceo, it is time for me to step aside and make room for the next generation of Dayton Hudson leadership,” said Macke, in a statement from the firm’s Minneapolis headquarters. “The board and I have agreed that the corporation is well positioned and that this is a good time for me to retire. Bob Ulrich is ready for the new challenge.”

Neither he nor Ulrich were available for further comment Thursday.

Ulrich, 50, whom observers say was being groomed for DH’s top spot, was named president of Target in 1984 and chairman and ceo in 1987. He was elected to the DH board last September.

His successor has not been named, but industry analysts think it likely that the replacement will come from within the company. Possible candidates, they say, are Kenneth Woodrow, Target’s vice chairman; M. William Gerton, executive vice president of operations, and Robert Guelich, senior vice president of merchandising.

“Ulrich is a real leader, and has done a tremendous job running Target,” said analyst Walter Loeb of Loeb Associates. “That shows how important Target is to the corporation.”

He thinks Ulrich’s successor might be someone from the division’s senior management.

Janet Mangano, retail analyst with Burnham Securities, said, “This is a big surprise. I expected Ken Macke to stay there forever. Bob Ulrich is an excellent successor, but I’m surprised Ken is stepping down from such an active role.”

Mangano said DH’s operations are poised for a turnaround — particularly the troubled Mervyn’s division — with the uptick in the California economy.

She concurred that DH would probably look within for Ulrich’s successor, because all of its divisions have well-developed management and the company has a good track record of nurturing executives.

She credited Macke with the merchandising changes at the divisions, and with protecting the company’s financial strength.

“He maintained a strong consumer franchise in its existing markets and blazed trails in new markets, especially with Target,” she said. “You could credit Target with that, but it was Macke’s initiative.”

Thomas Tashjian, analyst at First Manhattan Co., called Ulrich an “outstanding executive and manager,” and said it made sense, especially since Target is 58 percent of the business at DH.

He pointed out that last year, Target “sent a SWAT team to go fix Mervyn’s.” That, Tashjian said, shows Ulrich has the overview to run the corporation.

He also expects the strong management team at Target to move up.

Some observers speculated that Macke might have been forced out.

Linda Morris, analyst with PNC Investment Management, said the poor performance of Mervyn’s might have had something to do with Macke’s exit. Peter Schaeffer, analyst with Johnson Redbook Service, said, “When you look at the profits on the whole, they haven’t risen so quickly. Whether the board mandated [Macke’s retirement] or it was his own feeling, it is appropriate for a change. He probably realized that everybody gets stale after a while.”

Ulrich and Macke began their careers with Dayton Hudson as merchandise trainees at Dayton’s department store — Macke in 1961, Ulrich in 1967.

Macke was named ceo of Dayton Hudson in 1983 and chairman in 1984. He has held the joint post for 10 years — longer than any other executive since the corporation went public in 1967.

Under Macke’s leadership, DH has grown to 909 stores in 33 states, with 1993 revenues at $19.2 billion. When he became ceo, the corporation had 350 stores and revenues of $3.6 billion. Macke also oversaw several major developments at DH, including the consolidation of the department stores and then the key acquisition of Marshall Field’s in 1990, and the growth of Target into California, the Pacific Northwest and the Southeast.

He was instrumental in the major real estate acquisitions of Ayr-Way, FedMart, Gemco and Gold Circle/Richway. From 205 stores in 1983, Target now has more than 550 stores coast to coast.

Ulrich was named executive vice president of Dayton’s Department Store Co. in early 1981. Later that year, he was named president and chief executive officer of Diamond’s, a former operating company of Dayton Hudson, with headquarters in Phoenix. In May 1984, he was named president of the combined Dayton Hudson Department Store Co., a few months before going to Target.

Under his leadership, Target has more than doubled its revenues and operating profits, while significantly increasing its store base. In 1987, Target operated 317 stores and had revenues of $5.3 billion. Its operating profit was $323 million.

At the end of 1993, Target had 554 stores and turned in revenues of $11.7 billion and record operating profits of $662 million.

Dayton Hudson stock closed at 75, up 1/4, on the New York Stock Exchange Thursday.