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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However, sources note that Federated  has a lot on its plate currently. “Federated is busy centralizing its home store. It’s staggering,” said one Federated source. The company, which is performing well, is also changing all of its non-Bloomingdale’s units to the Macy’s nameplate. Terry Lundgren, Federated’s chairman, ceo and president had no comment Sunday.

 With Friday’s news that Kahn, May’s chairman and ceo since May 1998, had resigned after a disappointing tenure marked by same-store sales, profit and stock price declines and lackluster merchandising, further departures are likely. Said one May insider, “Gene brought up a lot of people he knew, many from Filene’s,” the Boston-based division he ran before joining corporate. “A lot of people are afraid that whoever comes in will clean house.”

The search for Kahn’s successor will be difficult. For one, May would be hard pressed to pirate anyone from Federated, Penney’s or Saks Inc. due to non-compete restrictions. Two highly regarded Federated officials, Sue Kronick, vice chairman, and Michael Gould, Bloomingdale’s chairman and ceo, would otherwise be good candidates.

Others said that May would consider Allen Questrom, who left as chairman and ceo of J.C. Penney in December, a year ahead of when his contract was due to expire and who has the golden touch for turnarounds. The 64-year-old Questrom has said he wants to retire, though some close associates said he would consider another job. However when asked if he would go to May, Questrom said Sunday, “I’m not at all interested.”

His number-two executive at Penney’s was Vanessa Castagna, who held the title of chairman and ceo of Penney’s stores, catalogue and Internet, but left after being passed over for the top position in favor of Myron Ullman. She would also be checked out by May’s search committee, and has been interviewing at Mervyn’s, Kmart Corp. — which is merging with Sears, Roebuck — and other retailers. On Monday, she said: “I’m making no decisions. I’m taking my time.”

There is also said to be three top inside candidates, including Frank J. Guzzetta, president and ceo of Marshall Field’s since November. He held those titles at the Hecht’s/Strawbridge’s division, headquartered in Washington, D.C. He’s regarded as a strong merchant with leadership skills. “He’s good at developing people,” said a source close to May.
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