QUESTROM THE FRONT-RUNNER FOR PENNEY’S CEO JOB
Byline: David Moin
NEW YORK — Penney’s may have its man. In a stunning development, Allen Questrom has emerged as the leading candidate to run the struggling J.C. Penney Co. as chairman and chief executive officer, WWD has learned.
Questrom, currently chairman and ceo of Barneys New York, would succeed James Oesterreicher. An announcement could come soon.
Questrom could not be reached for comment late Wednesday, when speculation began to intensify in New York.
Skilled in huge turnaround situations, with strong ties to the vendor, banking and retail communities, Questrom is among the most popular retail executives in the country. At Barneys, he is working to lift the performance of the specialty chain, positioning it for a possible sale or public offering. Under his contract at Barneys, Questrom does not receive a salary, but is positioned for a huge payout should the company be sold.
Aside from walking away from a potential Barneys windfall, his departure would leave a huge void in leadership. Questrom, however, reportedly has been considering hiring a number-two executive at Barneys who could be named president.
Barneys is the kind of high-profile, upscale retail operation Questrom loves, but with just around $365 million in volume, it’s small potatoes for the industry giant. Before joining Barneys, the sociable Questrom was chairman and ceo of Federated Department Stores, where he orchestrated a remarkable turnaround, wrestling Federated out of bankruptcy in 1994 and soon after, pulling off two megamergers, folding Macy’s and Broadway Stores into Federated. Those maneuvers gave Federated clear industry dominance on the East and West Coasts.
Prior to Federated, Questrom was ceo of Neiman Marcus and before Neiman’s, he headed up Federated’s Rich’s division in Atlanta.
He’s often characterized as a “big-picture” executive who thrives on reshaping companies with broad-stroke strategies, rather than getting down and dirty in the nitty-gritty details of running stores. He could be just the morale-booster the Plano, Tex.-based Penney’s needs.
Aside from being the largest national department store operation in the country, with $33 billion in annual sales, there’s little else that distinguishes Penney’s. It has long suffered from an identity crisis, and sorely needs new direction and new blood, particularly in the merchandising arena. Some think that turning around Penney’s could even be a tougher challenge that turning around Sears or Kmart, which have clearer identities.
Some see Penney’s as a potential takeover or breakup candidate, and observe that it does has some solid components, such as its profitable e-commerce operation, and the Eckerd drug store business. Both could be sold off.
Yet with such nimble competitors as Wal-Mart and Target on the discount side, and Federated and Kohl’s on the moderate-to-better side, Penney’s has been squeezed to a murky middle-of-the-road position, leaving its future uncertain.
Last May, Oesterreicher announced that he was leaving, triggering a search and wide speculation about possible candidates. Most of it has been focused on Vanessa Castagna, a seasoned merchant credited with upgrading Wal-Mart’s apparel business. It’s expected that Castagna will remain the number-two executive at Penney’s and that more executives will be hired.
Meanwhile, Castagna’s presence has already been felt. She joined Penney’s last August from Wal-Mart and has implemented executive and merchandising changes and shed a lot of the slow sellers while attempting to spotlight trendier goods. Stores are being updated with some new boutiques, wider aisles and improved lighting, but not totally remodeled. The company has also adopted a more centralized approach to get goods on the selling floors faster and has stripped store merchants of most of their buying responsibility.
Earlier this year, Penney’s named DDB Worldwide as its advertising agency to develop a fresher image.
Over the past year, Penney’s broke a long tradition of promoting from within and began recruiting aggressively from the competition.
Oesterreicher will end an impressive 36-year career at Penney’s, but one ending on a down note due to his inability to revive the chain and get it back on track after over a half decade of sales slumps. He started as a Penney’s management trainee in Lansing, Mich., in 1964.
Should Questrom get the Penney’s job, there would be another major ceo retail slot available — besides Barneys. Penney’s rival, Sears, Roebuck is still searching for a ceo to succeed Arthur Martinez.