The chief financial officer is in retail’s hot seat.
In the past two-and-a-half months, cfos have come or gone at Neiman Marcus Group, J.C. Penney Co., Nordstrom Inc., Kohl’s Corp., Hudson’s Bay Co., Kirkland’s Inc. and Christopher & Banks, setting an unusual and disturbing trend. In one or two cases, it was just a matter of retirement. But industry experts believe the turnover also reflects angst in the industry and new and weightier responsibilities attached to the job.
“It’s a pressure cooker,” said Elaine Hughes, founder and chief executive officer of E.A. Hughes & Co. executive search. “The cfo is no longer a bean counter. The cfo is the financial ‘consigliere’ and strategist to the ceo as well as to the board. The job requires a new level of sophistication.”
“It’s an exhausting job and a lot of good talent is being enticed away to other industries where there is more room to play and innovate and have more fun,” said Adelle Kirk, senior vice president at Kirk Palmer Associates, another executive search firm. “Fashion retail is incredibly challenging right now. Margins are declining. Costs are getting squeezed out of the system and that’s taking a toll on the cfo.”
“In some cases, people are leaving just for better opportunities, but the bigger message is that being a cfo in a retail or apparel company is just less attractive for the individual than it used to be,” observed William Susman, founder of Threadstone Partners. “Company performance is tougher. Stock market performance is tougher. Equity options and equity packages are worth less. Private equity used to buy heavily into retail and apparel. Now we are seeing more evidence of transactions not getting done than getting done and private equity reluctance to invest in the sector. That’s another financial deterrent for a corporate executive.
“Unlike a merchant or head of stores, a cfo can more easily change industries and find new opportunities,” Susman added, citing the case of Adam Holland, who resigned as cfo at the Kirkland’s Inc. home decor specialty chain in May to assume a similar post in the health care sector, at Tivity Health.
Historically there were two major reasons why a cfo left a company — a better opportunity was discovered at another firm, or the cfo saw the writing on the wall where they worked and wanted to get out before the walls tumbled. There’s no one more in touch with the numbers and the prospects for financial success or failure than the cfo.
But the role has fundamentally transformed and grown over the last decade. The retail cfo must be more operationally savvy and equipped with qualities and skills that used to fall under the chief operating officer. They’ve got to know supply chain, planning and allocation and all facets of getting the product to market in ways that weren’t around years ago. They also have to deal with Wall Street, advise on mergers and acquisitions, restructurings and other financial aspects.
Underscoring the growing importance of the cfo, the financial machinations led by Michael J. Nicholson, president, chief operating officer and cfo of J. Crew Group, have enabled the retailer to push forward with its turnaround strategy. In early 2016, after Stuart Haselden stepped down as J. Crew’s cfo to join Lululemon, Nicholson was recruited from Ann Taylor, which has since shown a deteriorating performance.
The job description has changed because of how retailing is transforming. There’s margin compression due to price transparency enabled by the Internet, new ways to market and distribute products, widespread infrastructure erosion and, these days, every corner in the company is eyed for cost-cutting. “Pretty soon they’ll be counting the pencils,” Hughes noted. “To make money in the new model, you need individuals with a higher level of experiential complexity.”
At the end of June, Neiman’s cfo and chief operating officer Michael Fung left and longtime Neiman’s executive Dale Stapleton assumed the post on an interim basis. Fung worked at the company since November 2016 and came out of retirement to fill the cfo and chief operating officer roles on a temporary basis. He led the finance, accounting and overall operations and was “instrumental” in stabilizing the NMG One omnichannel merchandise system for the retailer, which was riddled with glitches and impeded business for months. Neiman’s is continuing to search for a permanent replacement.
Also in June, Anne Bramman became cfo of Nordstrom, succeeding Mike Koppel, who retired after 16 years at the Seattle-based company. Bramman came from Avery Dennison Corp., where she served as senior vice president and cfo. Earlier, she was cfo at Carnival Cruise Line and before that, cfo of Henri Bendel.
On Monday, Bruce Besanko joined Kohl’s Corp. as cfo, from Supervalu Inc., a food retailer and wholesaler. Besanko succeeded Wesley McDonald, who held the cfo post at Kohl’s for 14 years.
At Christopher & Banks Corp., Pete Michielutti, executive vice president, cfo and chief operating officer, will leave the company on Friday. A successor is being sought. Michielutti is joining Bluestem Group Inc., a holding company serving consumers 50 and older with a portfolio including Appleseed’s, Bedford Fair, Blair, Draper’s & Damon’s, Fingerhut, Gettington, Gold Violin, Haband, LinenSource, Norm Thompson, Old Pueblo Traders, Sahalie, Tog Shop and Wintersilks.
On Monday, J.C. Penney Co.’s cfo Edward Record disclosed that he decided to leave the company “to pursue other interests.” Record, who also held the title of executive vice president, will remain with the company in an advisory capacity until Aug. 7 to assist with the transition while a search for his successor is conducted. Andrew Drexler, Penney’s senior vice president, chief accounting officer and controller, will become interim cfo along with his current duties.
And in a most unusual announcement, Hudson’s Bay Co. said its cfo Paul Beesley would stay with the company longer than he planned. Last May, HBC said Beesley would resign July 7 to return home to Canada to be closer to his family. But last week, the company said Beesley will remain in his current role while HBC continues its cfo search. An executive search firm has had the assignment for some time.