Macy’s Terry Lundgren to Hand Over CEO Role
June 23, 2016,
CINCINNATI—Macy’s Chairman and CEO Terry Lundgren will hand over the reins of CEO to Jeff Gennette in the first quarter of 2017, the retailer announced this morning. Lundgren will continue as executive chairman of the company.
The transition is part of the board of directors’ succession plan that included Gennette’s election as president in 2014. Gennette joins the Macy’s Inc. board effective today, and assumes additional management responsibility during the transition period, including oversight of the Macy’s stores organization.
“I have been honored to lead this enterprise through a period of unprecedented reinvention,” said Lundgren, who was named CEO in 2003 and chairman in 2004. “While our company is larger, stronger and more resourceful than we were 13 years ago, now is the time to reset our business model to thrive in a future that is being driven by rapid evolution in consumer preferences and shopping habits. Our company must and will change in response to the profound secular forces that are driving consumer spending. I am firmly committed to, and invigorated by, the process we have begun to set a going-forward strategy in lockstep with our evolving customers.”
Marna C. Whittington, lead independent director for Macy’s Inc., credited Lundgren with being an “outstanding” leader. During his tenure the company nearly doubled topline sales, acquired the May Department Stores Company, created Macy’s and Bloomingdale’s as nationwide brands with emerging global opportunities.
But the retailer is facing an uphill climb. Macy’s most recent fiscal year net fell 29.8 percent to $1.1 billion, as sales dropped 3.7 percent to $27.1 billion, including a same-store sales shortfall of 2.5 percent. Its fourth quarter net income decreased 31.4 percent to $544 million, with net sales tumbling 5.3 percent to $8.9 billion, including a decline of 4.3 percent in same-store sales. Those disappointing sales and earnings prompted the retailer to cut costs earlier this year, including store closings and store grouping consolidation, the elimination of 600 back-office positions, staff reductions at Macy’s and Bloomingdale’s stores and voluntary separation offers made to senior executives. First quarter net income tumbled 39.9 percent to $116 million as net sales fell 7.4 percent to $5.8 billion.
“[Lundgren’s] leadership, combined with his vision and energy, will help set the tone for the next generation of growth at Macy’s, Inc. in collaboration with Jeff and the management team,” Whittington said. “One of Terry’s hallmarks has been creating an exceptional depth of management talent. Jeff Gennette has demonstrated proven leadership skills over his 33-year career with the company, and he is uniquely capable of leading the next chapter of Macy’s, Inc.’s history given his in-depth knowledge of the organization, his merchandising acumen and clear insight into the evolution of the retailing landscape.”
“Jeff Gennette is an extraordinary leader who has distinguished himself as a skilled merchant and retail operator,” Lundgren said. “He has worked closely with me over the past two years as president of Macy’s, Inc. in a first step in this succession process, and we are closely aligned on creating a compelling and sustainable path forward. In making this announcement today, the board and I want to communicate proactively the timing of the CEO transition as we act to seamlessly implement our future plans. Jeff and our team are well equipped to continue the transformation of our company for the next generation of customers and associates.”
Said Gennette, “This is the time for us to be laser-focused on what is most important to our customers, and how we can best deliver the shopping experience that will secure our position as the premier omnichannel retailer of the future. We have successfully navigated our way through changing customer trends in the past and there is no doubt that Macy’s, Inc. will need to be a significantly different retailer in the future in the way we operate and approach the marketplace. But we also must continue to tackle our immediate priorities with vigor and discipline. Terry and I have an outstanding relationship and we will continue to collaborate closely through this CEO transition process.”