THE RETAIL SWEEPSTAKES
Retailers underwent a sea change in 1999. If they weren’t busy buying one another or shaking up executive ranks, they were opening vast numbers of stores or dealing with the emergence of Internet shopping and new brick-and-mortar formats and concepts. Here are some of the year’s key moments in retail.
In January, it was apparent that the size of Intimate Brands Inc. was becoming less than intimate. The retailer, a spinoff of Limited Inc., said it would open 260 new stores, develop a stable of new ventures and buy back $500 million in stock.
Federated Department Stores shook up its ranks with a sweeping round of changes affecting the executive suites of three divisions. Arnold Orlick was named chairman and chief executive of Rich’s/Lazarus/Goldsmith’s, based in Atlanta, succeeding Russell Stravitz, who resigned; Ron Klein took the top spot at Stern’s, filling a post left vacant by Matthew D. Serra in September; Peter R. Sachse was named vice chairman of Macy’s East, filling Klein’s job there, and Edwin J. Holman took Orlick’s former post as Rich’s president and operating chief.
J.C. Penney also took some relatively drastic steps to try to reverse its sliding fortunes. Its president and operating chief, John T. Cody, retired, and Marilee Cumming was named president of merchandising for stores and catalog. But it also said it would go outside its ranks to fill other key management slots. Penney’s comp-store sales slid 7.6 percent in December, which was generally a positive month for most retailers.
Bergdorf Goodman said it was starting to interview candidates for chief merchant as it prepared a succession plan for president Dawn Mello. Not that Mello was packing up her desk, but the retailer said this was standard operating procedure, that it was just getting things in order in case Mello decided to retire, possibly this year or next. Word would come in April that Peter Rizzo, president of Polo Retail Corp. and a former executive at Barneys New York, was tapped for the slot as vice chairman, eventually becoming president and chief merchant when Mello retires.
Howard Socol left J. Crew after less than a year. He was ceo, and his departure came amid rumblings of management discord and tough times in the catalog division.
Wal-Mart appeared to have tapped its heir apparent. H. Lee Scott was named vice chairman and chief operating officer, putting him in line for the ceo spot at the world’s largest retailer, which had sales of $118 billion last year.
As the month ended, so did the bankruptcy saga at Barneys New York. The exit from Chapter 11 capped a bitter and tumultuous three years in which the Pressman family lost ownership of the store that Barney Pressman founded in 1923. It also brought to an end the battle between Barneys and Isetan, Barneys’ landlord, which had sunk $600 million into a grand expansion.
In February, in an effort to intensify and expand its designer offerings, Nordstrom — famous for its decentralized buying habits — centralized its designer buying. The idea was to add high fashion names to more Nordstrom stores, particularly in the suburbs.
Gap announced plans to take Old Navy online and created a direct marketing division to support that business. The new unit would also handle the existing Gap online operation and the Banana Republic catalog.
Apparel and retailing veteran Susan Falk landed at The Body Shop as director of product and a main director. Falk had been president and ceo at Diane Von Furstenberg and ceo at Express and at Henri Bendel.
The end of an era for Bradlees: The discounter emerged from Chapter 11 bankruptcy after a 3 1/2-year struggle in the courts.
And Kohl’s said it was coming to town: The Midwestern giant said it would buy 32 Caldor stores in the New York metropolitan area.
In March, Tommy Hilfiger landed in London, opening a New Bond Street flagship that he hoped would be a beachhead for expansion in Europe. His new store is 16,000 square feet and carries the full range of his products.
Federated filed papers with the federal government to get into a new business: banking. The retailer said it might develop in-store banking services for its customers, or seek other financial services vehicles for growth.
The J. Peterman Co. was rescued by Paul Harris, the Indianapolis specialty chain. Peterman had gone bankrupt in January, ceased operations in early March and was on the brink of liquidation when Harris swept in with a $10 million surprise bid.
William Podnay succeeded Dale Kramer as chairman, president and ceo of ShopKo Stores. Kramer retired.
And Evan Guillemin was named president of Delia’s, the junior apparel accessories and home furnishings company, which was focusing on its Internet subsidiary, ITurf.
The old Alexander’s department store site, between East 58th and 59th Streets and Lexington and Third Avenues in New York, was under the magnifying glass in April. Nordstrom and Hennes & Mauritz were each said to be eyeing the prime retail spot. H&M, a Swedish apparel chain, was already considering a space at 640 Fifth Avenue at 51st Street.
April found Donna Karan in London, where she opened stores in typical whirlwind fashion — throwing a party, signing autographs, dining with customers, and squeezing in some shopping. She took ownership of the Collection and DKNY stores on New Bond Street and a DKNY unit in Manchester. They had been owned by Christina Ong’s Club 21.
NikeTown also hit Europe, opening stores in Berlin and London.
Jay Levitt was named president and ceo of Robinsons-May stores.
Jack Smith left as chairman of Sports Authority, the sporting goods and apparel category-killer chain he founded in 1987. He was succeeded by Marty Hanaka, who was the chain’s ceo.
Penney’s took a step toward getting into publishing. The retailer signed a deal with Redwood CMP to publish a magazine aimed at teens. It was tentatively called Noise.
You can take the guy out of retailing, but…Allen I. Questrom, who surprised the retail world when he abruptly left Federated in May 1997, produced another shocker in May when he took the post of chairman and ceo of Barneys New York. After nearly two years of retirement, Questrom was getting restless and started cruising the floors of Barneys’ Madison Avenue flagship, which “got my juices percolating.” He would get no salary, but a large equity stake, apparently banking on raising the value of the chain and cashing in big later.
Elsewhere on the senior retailing circuit, Joseph Boitano quit as Bergdorf’s chief merchant to join Saks Fifth Avenue as senior vice president and general merchandise manager for women’s designer apparel, bridal, fashion accessories and handbags. Even though his new title is a notch lower than the Bergdorf’s job, he would be managing a much larger business. Reportedly, Boitano started job-hunting in April when he learned he wouldn’t be the successor to Dawn Mello. Peter Rizzo got that job when Mello retired in August.
Tommy Hilfiger and Calvin Klein landed on the Riviera almost simultaneously. The two Americans opened stores there — Klein in Cannes, Hilfiger in Saint-Tropez. The shops opened amid the hoopla (and accompanying media crush) surrounding the Monaco Grand Prix and the Cannes Film Festival.
After three years of planning and building, Ralph Lauren’s London palace finally opened. At 24,000 square feet, the four-floor Polo flagship became the largest American presence on New Bond Street, where Donna Karan, Tommy Hilfiger and CK Calvin Klein also have stores. Lauren himself has a smaller store up the block. The Polo building, a former bank, also has three floors of administrative offices and showrooms for Polo and Poloco, one of Lauren’s European licensees. The store was reportedly expected to pull in sales of $100 million a year to break even.
Brooks Bros. made a big play for the ladies. The traditional men’s retailer, which had only flirted with women’s wear for most of its history, opened a 24,000-square-foot flagship in Manhattan, with about 6,500 square feet devoted to women’s apparel. It opened two freestanding women’s stores last year, and said its goal was to build the women’s business to 20 percent of volume, up from its 14 percent of sales in full-line stores.
Bergdorf’s executive ranks thinned again in June, with the departure of Michael Calman, senior vice president of marketing. Calman joined XCO, a new company that develops transaction processes for consumer product firms on the Internet.
Saks headed for the desert. Saudi Prince Al Waleed Bin Talal Bin Abdulaziz Al Saud was developing a shopping center in Riyadh, Saudi Arabia, in which he would include a 65,000-square-foot Saks — the retailer’s first full-line store overseas. It is slated to open in October 2000.
Linda LoRe was named president and ceo of Frederick’s of Hollywood. She formerly held those posts at Giorgio Beverly Hills.
Joe Levy, the long-standing chairman and ceo of Gottschalk’s, retired as ceo, giving the title to Jim Famalette, who was president and chief operating officer. Levy is the great-nephew of Emil Gottschalk, who founded the Fresno, Calif.-based chain in 1904. Famalette is the first non-family member to serve as ceo.
In July, Gap invaded France. For its first megastore outside the U.S., the American retail institution picked Paris. The 19,000-square-foot flagship on the Champs-Elysees was affirmation of its commitment to building a formidable presence in Europe.
A Boston-based management and investment team bought 94 Laura Ashley stores in North America from its parent, Laura Ashley Holdings of London. The parent was anxious to unload the stores, sold them for $1, and planned to take $34.4 million in writeoffs from the business.
Evans Inc. said it would sell its remaining six stores in the Chicago area to concentrate on its leased fur-department business. It closed three others.
Sears, Roebuck & Co. added another name to its apparel arsenal and injected a hipper, younger feeling to its floors as it rolled out its exclusive Benetton USA collection in 450 stores.
Ames Department Stores cut a record 54 ribbons on new stores on a single day, but said it planned to surpass that standard by opening 58 units on Sept. 23.
Ralph Lauren opened a 4,300-square-foot Polo Sport store in SoHo, staking a claim on the active gang in lower Manhattan. The store will house Lauren’s technical lines for athletes, his elegant signature collection, as well as vintage, sportswear and accessories for those who just want to look good in the stands.
Roger N. Farah stepped down as ceo of the Venator Group. He kept the chairman title and was succeeded as ceo by Dale W. Hilpert, who continued as president. Farah was at the helm of Venator — the former Woolworth Corp. — for 4 1/2 years, presiding over its restructuring and the closing of the F.W. Woolworth chain.
Penney’s snagged one of the key executives in women’s apparel retailing in Vanessa Castagna, head of Wal-Mart’s women’s business, who jumped to Penney’s as executive vice president and chief operating officer of stores, merchandising and catalog.
Lots of store planning and opening news in August. Among the headlines: Donna Karan opened a massive DKNY shop on Madison Avenue and the designer, whose image is virtually synonymous with black, did it all in living color. “All of a sudden, my eye had shifted,” she proclaimed, “I wanted to walk in and see color.” In addition, DKNY opened its first Japanese freestanding store in Tokyo and a shop in the King of Prussia mall in Pennsylvania. Celine and Loro Piana each announced they would open flagships on Madison Avenue; J. Crew was opening in Rockefeller Center; Chanel said it would open its first freestanding airport store in London’s Heathrow in the fall, while Sephora said it would invade London with five stores over the next year. Old Navy opened a monster flagship on West 34th Street in Manhattan. The 80,000-square-foot, four-story store completes the Gap family album on the street — there are Gap and Banana Republic stores up the block — bringing the total Gap Inc. store space along the strip to 150,000 square feet.
British designer Nicole Farhi opened a 16,000-square-foot emporium on the site of the old Copacabana nightclub on East 60th Street in Manhattan that’s part fashion store, part restaurant. And not a little grab-a-burger-while-you-shop counter, either — it’s a 120-seat eatery. It’s a part of the massive three-level unit with two double-height atriums that’s the largest Farhi store in the world and the only one in the U.S.
In a sweeping realignment of duties at Sears, Robert Mettler was removed as president of merchandising and ceo Arthur Martinez took charge of fixing the chain. The company also established an office of the chief executive, which Martinez said would narrow the number of people reporting to him and let him get closer to the merchandising teams.
Gene Pressman found a new gig: the former Barneys New York chief joined Vanity Fair magazine as a contributing editor.
Michael Steinberg, who came out of retirement seven years ago to revitalize Macy’s West, set his re-retirement date for January.
Ralph Destino retired as chairman of Cartier after 26 years with the luxury jeweler, the last 11 at the helm, while Robert DiNicola gave up the ceo title at Zale Corp. and was succeeded by longtime associate Beryl Raff. DiNicola remained chairman and Raff continued as president.
When he wasn’t buying companies in all corners of the world or otherwise building his international luxury goods empire, Bernard Arnault was opening megastores to sell his wealth of products. In October, it was the much-hyped Sephora flagship that opened in Rockefeller Center, three stories tall and 21,000 square feet, the largest in the fast-growing beauty chain. Its assisted self-sell format and entertainment merchandising is revolutionary for the industry. It has 38 stores in the U.S., and this one is expected to generate $30 million over the next year. It also launched Sephora.com, its online store, which is slated to do $20 million.
News from one of May Co.’s divisions: Marshall Hilsberg, chairman of Lord & Taylor, was said to be considering retirement.
Gap Inc. said its chairman, Millard Drexler, would spearhead the turnaround at its Gap division, assuming the responsibilities of Robert Fisher, who resigned. Fisher, corporate vice president and president of the division — and son of founder Donald Fisher — stepped down for personal reasons but remains on the board. The news of Drexler’s involvement sent Gap shares soaring 9.8 percent, or 3 1/8, in one day, to 34 3/4. Shares closed Dec. 9 at 44 1/2, down 7/16, on the Big Board.
After the abrupt departure of Vanessa Castagna, who became Penney’s second-in-command, Wal-Mart named Lois Mikita senior vice president and general merchandise manager, heading women’s fashion for the Wal-Mart Stores division.
Abercrombie & Fitch stock plunged nearly 20 percent in one day — losing 6 3/16 points to close at 26 5/16 — with 16.8 million shares changing hands. A&F swiftly dismissed an investor relations executive who leaked sales information to one investment firm, triggering the massive stock selloff. Shareholders quickly launched multiple class-action lawsuits charging the retailer and some of its employees with securities law violations. An investigation by the Securities and Exchange Commission ensued. A&F shares closed Dec. 9 at 29 3/16, down 5/8, on the New York Stock Exchange.
Kmart got aggressive about its expansion, and announced it would open or enlarge 400 sites over the next five years. It’s part of a drive to better compete with its chief rivals, especially Wal-Mart and Target.
A Fifth Avenue fixture will no longer be doing business on the famous street. Bijan said it would let its lease expire in February and look for a different neighborhood — around Madison Avenue between 60th and 65th Streets. Owner Bijan Pakzad said it was because the character of Fifth has changed. He cited the appearance of such stores as Disney, Coca-Cola, NBA, Gap and Banana Republic. Bijan had been in the store at 699 Fifth Avenue between 54th and 55th streets since 1983.
Breakfast at Tiffany’s now includes a croissant and cafe au lait. After an absence of nearly a half-century, Tiffany returned to Paris in November. The American jewelry giant opened a 7,000-square-foot flagship on Rue de la Paix, in a neighborhood that’s home to some of the world’s top jewelers.
Alexander McQueen, meanwhile, opened his own little palace on Conduit Street in London. The 2,000-square-foot store is his first freestanding shop, showcases his whole range of lines, and is backed by Onward Kashiyama, McQueen’s financier. “I always wanted one of these,” he said. McQueen added that this was the first of several over the next two years, with stores probably in Japan and in New York.
You can go home again: Barneys New York is going back to the old neighborhood — Chelsea — with plans to convert its current warehouse into a full-fledged store modeled on the Co-op floor at its Madison Avenue flagship. The new store, on 17th Street between Seventh and Eighth avenues — a block away from Barneys’ original site — is expected to be ready for spring.
In November, Christina Johnson was tapped as president and chief executive officer at Saks Fifth Avenue. Johnson, 48, will assume the roles on Feb. 1. She has been with Saks since 1991.
And in December, Manhattan saw its latest skyline change as LVMH opened a 27-story office tower. The building houses a Christian Dior store as well as offices for all its American businesses.