JEFFREY SHERMAN TO MASTERMIND DEVELOPMENT OF FEDERATED DIRECT
Byline: David Moin / With contributions from Vicki M. Young
NEW YORK — In a top-level promotion crucial to the future of Federated Department Stores, Jeffrey Sherman, president and 29-year veteran of Bloomingdale’s, has been named chairman and chief executive officer of Federated Direct, to oversee the corporation’s emerging catalog and e-commerce businesses.
With the nation over-stored and department stores a mature sector of retailing, the development of new revenue streams is viewed as critical for Federated and other store operators. Sherman will spearhead the growth and integration of Federated’s catalog and Internet units, which include Bloomingdale’s By Mail, Bloomingdales.com, Macy’s By Mail, Macys.com and the Fingerhut subsidiary. Fingerhut was purchased by Federated in March 1999, providing Federated with vast fulfillment capabilities for its fledgling e-commerce businesses and catalog operations, and broadening Federated’s market reach with Fingerhut’s lower and more moderate prices. With Sherman’s appointment Thursday, the catalog and e-commerce operations are now all under one management structure, with Sherman at the helm. Previously, Bloomingdale’s By Mail and Bloomingdales.com reported to the management of Bloomingdale’s department stores, while Macy’s By Mail, Macys.com and Fingerhut were under the Federated Direct umbrella.
“Our intent from the outset was eventually to bring all our direct-to-customer businesses under one division with a chairman who is responsible for all aspects of these catalog and e-commerce operations,” Ronald W. Tysoe, Federated’s vice chairman, said in a statement Thursday. He said Sherman has “a broad knowledge of retail, as well as a thorough familiarity with direct-to-customer catalog and e-commerce businesses, which he has overseen at Bloomingdale’s for a number of years.”
Sherman will report to Tysoe. Previously, he reported to Michael Gould, chairman and chief executive officer of Bloomingdale’s. He could not be reached Thursday.
Bloomingdale’s said it expects to name Sherman’s successor “in the near future.” Candidates from outside the Bloomingdale’s organization are being considered, sources said, including some from other Federated divisions with experience at the president level. “This is not a first-time-president job,” said one source.
The president’s post at Bloomingdale’s is a complicated one considering the challenges facing the organization, including strengthening and differentiating its niche within the department store pack against such competitors as Nordstrom, Saks Fifth Avenue, May Department Stores and even Macy’s, a sister division at Federated.
However, under the command of Gould and Sherman, Bloomingdale’s was quite successful. The two orchestrated huge expansion moves on both coasts — including a surge into California — and doubled the chain’s EBIT rate to around 10 percent. They also worked well together, with Gould’s emotional, fast-moving, out-there management style complementing the more reserved Sherman. “He’s very thoughtful in decision-making,” Gould told WWD. “There were no snap judgements. I could not be happier for Jeff, and they couldn’t have picked a better person to pull it all together at Federated Direct. He’s got a feel for merchandise and has established relationships through the organization in logistics, operations, financing and MIS.”
Sherman’s appointment at Federated Direct also suggests a renewed Federated push to maximize the Bloomingdale’s brand through new selling channels. “With Jeff at the helm, there is a much greater opportunity to grow Bloomingdales.com,” Gould noted.
On the Internet last year, Federated posted $60 million in sales, through Macys.com, Bloomingdales.com and Fingerhut, James Zimmerman, Federated’s chairman and ceo said in a recent interview. He projected Federated’s online sales at $170 million in 2000, but he declined to break out Internet sales by division. Reportedly, Macy.com’s contribution to this year’s Internet volume is projected at around $35 million. Federated expects Internet sales to eventually account for 5 to 10 percent of the corporation’s total sales, and Zimmerman said he’s giving the Internet business about three years to turn a profit.
Federated also said Thursday that William J. Lansing, the former chairman of Fingerhut, will leave the company “to pursue other interests.” He became Fingerhut chairman in May 1999 after having joined the company as president a year earlier.
At the New York-based Federated Direct, the following executives will report to Sherman: John Buck, president and chief operating officer of Fingerhut Companies and president of Fingerhut Business Services; Andrew Johnson, executive vice president of Fingerhut and president of Fingerhut’s e-commerce division; Michael Sherman, executive vice president-business development and general counsel of Fingerhut, and Richard Tate, president of the Fingerhut catalog division.
Sherman was named Bloomingdale’s president in 1989 after 18 years in senior merchandising, store operations and finance positions at the store. He started at Bloomingdale’s in 1971 in the executive training program, served as a store regional vice president and became executive vice president and chief financial officer in 1985.
This week, the Fingerhut subsidiary completed its acquisition of the Brownstone Studio and Lew Magram catalogs, snapped up for $6.75 million in a Manhattan bankruptcy court auction last month.
The two catalog operations, which sell women’s apparel and accessories, filed for Chapter 11 bankruptcy court protection in January when their parent company, StyleSite Marketing Inc., encountered a cash crunch from inadequate working capital. In addition to buying the inventory, trademarks and customer lists, Fingerhut said that the merchandising and creative staffs of the two catalogs will remain “largely intact.”
Fingerhut plans to operate the new business through its Tucson-based Arizona Mail Order Co. division, purchased in August 1998. Fingerhut also owns the Popular Club membership-based catalog operation, which sells general merchandise.