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The $15.4 billion retailer Tuesday named Terry Lundgren as its new chief executive, effective today, and announced a new corporate structure, consisting of five vice chairmen, reporting to Lundgren. While unorthodox to have so many executives with the title of vice chairman, in practice, it’s a classic corporate structure that enables the ceo to focus on strategy, investors, and managing his managers, leaving them to the nitty-gritty.
Speaking in a manner befitting a merchant, Lundgren told WWD, "The best strategy for Federated is to improve comp-store sales. That’s where our focus will be, particularly in 2003."
His appointment as ceo confirmed a WWD page-one report on Monday.
Lundgren, who also holds the title of president, succeeds James M. Zimmerman, who will continue as chairman for about a year before he retires at 60. While Zimmerman is an operations and financial executive, Lundgren rose through Federated’s stores and merchandising organizations in the Eighties and Nineties, and has been spearheading Federated’s private label buildup and "store of the future" program. Unlike Zimmerman, who has been based at Federated’s headquarters in Cincinnati, Lundgren will remain at Federated’s offices inside Macy’s Herald Square, in the heart of the garment district.
For Federated and most retailers, the priorities have been cost control, price cutting, couponing, consolidating with other retailers, and appeasing Wall Street. Somehow buying and selling of merchandise became a lost art in the Nineties, and some even think department stores are a lost cause. Not Lundgren, of course. "We’ve been successful at delivering earnings in spite of challenging sales results, but for us, the mission is to grow comp-store sales," he stressed.
Lundgren said 2003 will be "the year to lay the groundwork for delivering an improved shopping experience and product mix," so Federated can prosper at the cash register when there’s an improvement in consumer confidence, which has been plummeting, along with Federated’s sales. To fight the down trend, Lundgren said Federated, among other strategies, will roll out its "store of the future" format to entire metro markets starting with Atlanta. Heretofore, stores have been retrofitted on an individual location basis. He also spoke of deepening private label assortments and exclusives, currently representing 16 percent of total volume, but potentially 20 percent or a few points higher, and continuing to upscale Bloomingdale’s.