WILANSKY: ON SAKS SHORT LIST?
Byline: Jean Palmieri / With contributions from David Moin / Thomas J. Ryan / Brenda Lloyd
NEW YORK — Heywood Wilansky, who recently resigned as chief executive of Bon-Ton Stores last month, tops the short list of candidates to head the department store group of Saks Inc., according to industry sources.
Wilansky said Thursday he had not been contacted by anyone at Saks. He declined further comment. Wilansky started his career at May Department Stores Co. in 1976 and rose to become president and ceo of the Foley’s division in 1992. He left that post to join Bon-Ton as ceo in 1995.
On Wednesday, Saks Inc. announced that SFA, which was purchased two years ago, will become an independent company again through a spinoff into a separate public company called Saks Fifth Avenue Enterprises.
Saks Inc., which was called Proffitt’s before it acquired Saks Fifth Avenue in September 1998, will be renamed later, to reflect its remaining traditional department store operations: Proffitt’s, McRae’s, Younkers, Parisian, Herberger’s, Carson Pirie Scott, Bergner’s, and Boston Store. A separate ceo will be appointed for that division.
Brad Martin, chairman and ceo of Saks Inc., said the company has “appointed a special committee of the board” to conduct the search for the new department store head. The search will be led by Donald Hess who will work with vice chairman Jim Coggin. Philip Miller, chairman of Saks Fifth Avenue, is also reportedly on the committee. No executive search firm has been retained.
“It’s principally an outside search,” Martin said, meaning he wants to primarily consider people from outside Saks Inc.
The department store ceo will be headquartered in Birmingham, Ala.
The spinoff is expected to be done in November.
Eric Segal, president of the search firm of Kenzer Corp., believes Wilansky would be a top prospect for the department store post. However, he pointed out two downsides to the position. “[Saks Inc.] has never been known as the greatest payer in the world and the person would also have to move to Birmingham, which is the department store equivalent of Bentonville, Ark.,” he said.
“You’d be crazy not to have Heywood on your first list,” said Kirk Palmer, another executive search executive. “He has a good reputation — he was recruited away from May to join Bon-Ton — and he’s not working right now.”
Herbert Mines, of the search firm bearing his name, also mentioned Wilansky as a probable top candidate. “The department store division is a disparate group of businesses — some moderate, some better — and whether they keep the offices in Birmingham will also be a factor in their ability to recruit a person,” he said. “Heywood Wilansky is somebody with a good pedigree.”
Speculation also focused on Ron Klein, ceo of Federated’s Stern’s division; Bob DiNicola, chairman of Zale’s and former chief at Federated’s Bon Marche division; William McNamara, vice-chairman of May Department Stores Co., and Howard Socol, a former Burdines and J. Crew ceo. It’s unlikely, however, that executives such as Klein or McNamara would be wooed from their current posts. “Most of the principals sitting down have contracts, and the courts are leaning toward upholding them,” said Kenzer’s Segal. “So it will be an interesting challenge [for Saks], but they’ve got to get a power player who can maximize these stores.”
There was also wide speculation that the spinoff is a prelude to a selloff, meaning Saks Fifth Avenue or the department store group could be put on the market. However, tax considerations related to the spinoff reportedly make it prohibitive to sell either company any time soon.
“It does appear to us to be a preparation of the company for a potential transition in ownership at either or both divisions,” said Bill Dreher at Robertson Stephens.
“There could be a matchup of Saks Fifth Avenue with Neiman Marcus or LVMH, where they could use them as a distribution arm for their high-end products,” said Dreyer. Another analyst mentioned Nordstrom as a possible buyer.
Parts of the department store group could be attractive to Federated and May. “They are already looking for acquisitions and may have been offput by the choppy results of those stores since the acquisition of Saks Fifth Avenue,” Dryer said.
Morgan Keegan & Co. analyst Rick Snyder, who upgraded Saks to “outperform” from “market perform,” said he thinks spinning off Saks Fifth Avenue makes it much easier and more likely for Saks Inc. to sell the department stores business, noting that the stores are merchandised like those of other retail chains.
However, Rosemary Sisson at SBC Warburg, said, “I’m not sure how good a matchup they would be for Federated and May. Unless they want to extend themselves into smaller markets as a growth vehicle, I don’t see it. Maybe if they can get them on the cheap.”
Saks’ shares picked up 1/4 to 12 1/16 Thursday after Wall Street absorbed the news. Most analysts applauded the move, with some believing the shares would have received a better bounce if the retailer had not also warned that it expects a “modest” loss from operations in its second quarter ending July 29. Wall Street’s average consensus estimate had been 10 cents.