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May Co.'s CEO Search: Strong Vision Needed To Mount A Turnaround

With its chief executive, Gene Kahn, forced out last week, a much different future is on tap for The May Department Stores Co.

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NEW YORK — Gene Kahn’s sudden resignation from May Department Stores Co. on Friday could unleash a whirlwind of change at the troubled St. Louis-based retailer.

Not only is a difficult search ahead for a successor to the ceo — due to a limited pool of talent and May’s dire need for a merchant with vision — but market sources and analysts are raising a host of possibilities on how to fix the company, from consolidating May’s tired stable of 12 department store divisions down to a handful to unloading the credit card operation or even selling the entire company.

A surviving May Co. could also one day set up design offices in New York, where design talent is plentiful compared to St. Louis, and where executives could be more in touch with the fashion market and trends. Federated, Gap, Limited, Kmart and other retailers have established design operations here despite being headquartered elsewhere in the country.

“You need a vision that employees rally around. That’s the opportunity,” said Deborah Weinswig, managing director of U.S. equity research at Citigroup Smith Barney.

“This is a very difficult assignment, considering the business is so troubled,” said Robert Kerson, who runs an executive search firm bearing his name. “Each division May operates has lost share in its respective marketplace. It’s at least a five-year fix.”

“Maybe Federated and May will merge. There’s no ego involved in May Co. now” with Kahn gone, said a former Federated official.

In the event of divisional consolidations, old nameplates like Strawbridge’s, The Jones Store, L.S. Ayres, Famous-Barr, Kaufmann’s and Meier & Frank could disappear and be replaced by others that resonate stronger with consumers and cover more territory, such as  Lord & Taylor, Filene’s, Marshall Field’s and Robinsons-May.

A retailer such as Federated Department Stores Inc., or a private equity firm, could make a play for May in its wounded state. Talks between Federated and May have been on and off over the years, and the two retailers only have about 25 percent of their stores in the same markets. Federated is strongest on the East and West Coasts, while May has more going for it in the Southeast and Midwest regions. 
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