Lundgren Takes Helm As Federated Returns To Black in 4th Qtr.

It’s back to some of the fundamentals for Federated Department Stores, which has a new ceo in Terry J. Lundgren, and a new corporate structure.

Lundgren’s appointment got a general thumbs-up from Wall Street Tuesday, even though it had been foreseen for some time. "There’s every reason to believe that they will maintain or extend their leadership on the merchandising side," said McDonald Investments analyst Jeffrey Stein. "A merchandising culture is fairly deeply ingrained in this company, so I think that would make this a seamless transition."

A.G. Edwards & Sons analyst Robert Buchanan said, "The change will be good for the company. It’s very important that Federated and May Co. break out of the conventional bind that has held them back over the years. Beyond any change on the organization chart, the chief challenge that Terry faces is to reinvigorate the company with new and novel thinking."

Reporting to Lundgren under the new corporate structure will be five vice chairmen, including four newly named ones. They are: Susan Kronick, formerly group president for regional department stores, who now has all the divisions — Macy’s East, Macy’s West, Bloomingdale’s, and regionals Burdines, The Bon Marche and Rich’s/Lazarus/Goldsmith’s — reporting to her; Tom Cole, chairman of Federated logistics and operations, which includes store design and construction; the Federated Systems Group and the financial, administrative and credit services divisions; Janet Grove, chairman of the Federated Merchandising Group, and Thomas G. Cody, formerly executive vice president/legal and human resources, who now also has internal audit, external affairs and philanthropic activities.

Also, Ronald W. Tysoe continues to serve as a Federated vice chairman, responsible for finance and real estate. Zimmerman, in addition to chairing the board, will work with Lundgren on corporate strategic initiatives. But with Zimmerman no longer involved in the day-to-day operations, the atmosphere will certainly change at Federated, considering he has been considered among the toughest and demanding retail operators in the business.

"With the five vice chairmen, Terry has an ace team to support him so he can move into the more strategic role," observed Hal Reiter, ceo of Herbert Mines Associates executive search. "If you are trying to create a full-entity ceo, with most organizations they don’t run operations. They have a discreet group of operators running business units. This allows Terry to work with the investors, Wall Street, acquisitions, financings, new formats or ventures. A ceo should not be rolling up his sleeves. Federated has created a classic organization with a classic pyramid structure."
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