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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Among the opportunities she cited are beefing up private label at Marshall Field’s, where only 7 percent of the goods are under the store name.

She cited the possibility of huge cost savings by dropping several nameplates, with four banners remaining: Filene’s, Field’s, Robinson-May and Lord & Taylor. But she noted there have been certain store improvements, including better signage and a steady rollout of contemporary departments called Imagination. She said about 70 stores already have 10,000-square-foot Imagination shops in place, and 180 are seen by the end of the first half.

A different point of view recently emerged from Bob Buchanan, equity analyst at A.G. Edwards & Sons Inc. In a report last month, he reduced the fourth- quarter earning per share estimate on May from $1.31 to $1.25 versus the current consensus number of $1.40, based on visits to May’s stores where he saw “a major backup of inventory in women’s apparel. He also estimated a 6 percent drop in fourth-quarter same-store sales, along with a 150-basis-point increase in the period’s expense ratio, partly due to Field’s “bloated cost structure and integration expense.”

He described the women’s apparel, juniors and men’s apparel as “less than compelling” and private label poorly developed with the exception of the Ideology label.
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