NM’s Lundgren Takes Key Slot at Federated

NEW YORK - Terry J. Lundgren, the personable chairman and chief executive officer of Neiman Marcus in Dallas, will become chairman and ceo of Federated Merchandising, based here, on April 11.<BR><BR>Lundgren, 41, is considered the protege of Allen I....

NEW YORK – Terry J. Lundgren, the personable chairman and chief executive officer of Neiman Marcus in Dallas, will become chairman and ceo of Federated Merchandising, based here, on April 11.

Lundgren, 41, is considered the protege of Allen I. Questrom, the 53-year-old chairman and ceo of Federated with whom he worked twice before, once at Bullock’s, once at Neiman’s. With Tuesday’s announcement of his appointment to Federated, Lundgren became one of the leading contenders to one day succeed Questrom. “This is the kind of opportunity that I believe may not come around again in the near future,” Lundgren said Tuesday. “It is a key job in the company, and one that I think is going to be a real experience for me. Running the merchandising division is a completely different type of challenge and that’s always exciting.

“I’ve loved running Neiman Marcus. It’s been a fantastic experience.”

The Federated announcement confirmed reports in WWD and other publications on Feb. 1.

Neiman’s said Lundgren will stay at the store until his contract expires in early April. The company said a search has begun for his successor.

Industry observers said there is only a short list of executives with top-level experience in high-end retailing that could qualify as Lundgren’s successor. Among them are Burton Tansky, chairman and ceo of Bergdorf Goodman, Rose Marie Bravo, president of Saks Fifth Avenue, and Joseph Cicio, chairman and ceo of I. Magnin. Tansky and Cicio declined to comment about that possibility. Bravo could not be reached.

In the endless game of retailing’s musical chairs, there was speculation that if Tansky moved to Neiman’s, Cicio would be a candidate to run Bergdorf’s.

Neiman’s and Bergdorf’s are divisions of the Neiman Marcus Group, which is controlled by Harcourt General Inc.

Herbert Mines Associates is handling the search for Neiman’s, adding to the likelihood that the chain will go outside its ranks to select a new ceo. The number two merchant there is Janet Gurwitch, executive vice president of women’s.

Questrom first hired Lundgren in 1975, as an executive trainee at Bullock’s. In 1988, he recruited him to Neiman Marcus as an executive vice president for stores. Questrom held the ceo spots at Bullock’s and Neiman’s, and became Federated’s ceo in 1990.

“Allen and I have worked together successfully in the past,” Lundgren said. “I have a tremendous amount of respect for him and I like him as a friend. We may not always agree, but over time we have developed a point of view about the important issues in running a company. I think both of us realize that what makes a business go is quality people.”

While Questrom is regarded as a merchant visionary, Lundgren’s strengths are as an administrator and marketer, skills that enabled him to achieve solid sales and profit results at Neiman’s.

Lundgren, a soft-spoken, friendly man who is one of the industry’s most popular personalities, became president and ceo of Neiman’s in February 1990, when Questrom left for Federated. Last March, he was named chairman, continuing as ceo. He successfully exploited the five-year, $300 million capital improvement and expansion program committed in 1988 by Harcourt General.

Neiman’s has always been high-end, but Lundgren helped cement the chain’s reputation as the country’s dominant retailer of luxury merchandise. He launched direct mail books, each featuring a single designer, increased appearances by top designers and strengthened advertising. Neiman’s is said to do more sales per door in bridge and designer than any store in the U.S. Annual bridge volume is estimated at $300 million; the women’s designer business is $225 million. In the first quarter ended Oct. 30, the chain’s comparable-store sales jumped a hefty 9.6 percent, despite widespread apathy among consumers for fall fashions. For the year ended July 31, Neiman’s posted a same-store sales gain of 7.6 percent, including the mail order division. Total revenues were $1.45 billion, a 12.7 percent gain.

At Federated, Lundgren succeeds Roger N. Farah, who left in August and will become Macy’s president and chief operating officer in July.

Lundgren will be joining a strong team of merchants, including several with broader experience, including such ceo merchants as Michael Gould of Bloomingdale’s, Harold Kahn of Abraham & Straus/Jordan Marsh, and Mark Cohen of Lazarus. As for Lundgren’s future at Federated, some sources said it’s no sure bet that he’s heir apparent to Questrom. They don’t believe it’s an issue now, since Questrom has big long-term plans for Federated that he wants to fulfill: He’s trying to merge with the bankrupt R.H. Macy & Co., establish Federated as the nation’s largest department store operator and elevate its profits.

“I don’t think that Lundgren is doing this because he has an iron-clad guarantee to succeed Questrom, but everyone realizes Terry comes in with a good chance,” said one source. “Clearly, there are other motivations.”

Among them, more money and the chance to work with Questrom again, the source added. Lundgren reportedly earned $650,000 in salary in 1993, with a bonus pushing his cash compensation close to $1 million

Federated Merchandising is the buying and product development arm for six of the seven Federated department store divisions. Bloomingdale’s continues to do its buying independently.

Under Federated Merchandising’s “team buying” approach, executives from the divisions make group decisions on products. Lundgren’s greatest strength, sources say, is his ability to coordinate strategies, and keep his staff focused on the goal. Tom Cole continues as president of Federated Merchandising, responsible for merchandise information systems, distribution and technology.

According to sources, Lundgren will lead a “vendor intensification” effort this year at Federated. That means buying much more from Federated’s core group of 400 vendors, including such names as Elizabeth Arden, Jones New York, Tommy Hilfiger, Liz Claiborne Men’s, Naughton McNaughton and Alfred Dunner. Federated’s top 400 vendors represent about 70 percent of its $7.3 billion volume in 1993, but could represent at least 75 percent by the end of this year. Currently, Federated buys from roughly 9,000 vendors, but the list will be pared down, as vendor intensification progresses.

“In the past, Federated has been less focused than other department stores,” said one retail source. “It’s easier to deal with fewer vendors.”

As head of Federated Merchandising, Lundgren becomes the number two merchant at the corporation, behind Questrom. The spot is being strengthened, so that Lundgren has more authority than Farah had in selecting products for Federated divisions, and more clout with vendors.

He will report to Questrom.

The post is not considered as high profile as the top job at Neiman’s. For that reason, some industry sources expressed surprise that Lundgren made the move.

“I’m not hung up on being in a high-profile position,” he said. “My goal is to be in a position where I can make a maximum contribution and improve the performance of the company.”

Nor is he worried that the new merchandising post will remove him from the stores.

“I’ve loved running the stores, and I’ll be in lots of Federated stores and the competition’s stores — you can count on that,” he declared. “I’ll never give that up because in the end that’s where it happens with the customer, and that’s where I learn the most.”