Federated Department Stores, Inc. announced a long- planned management transition and change in its top corporate management structure. Terry J. Lundgren, president/chief operating officer and chief merchandising officer, has been elected by the company's board of directors to succeed James M. Zimmerman as Federated's chief executive officer, effective tomorrow. Zimmerman will remain as chairman of the company.
Lundgren, 50, will assume the new title of president and chief executive officer. Under the new corporate structure, there will be five corporate vice chairs reporting directly to Lundgren. They include Ronald W. Tysoe, 49, who since 1990 has served as Federated vice chair, responsible for finance and real estate, and four new vice chairs who were promoted to this position today. The new vice chairs are:
*Thomas G. Cody, 61, who has served as executive vice president/legal and human resources since 1992. As vice chairman, he will continue to be responsible for legal and human resources, as well as internal audit, external affairs and the company's philanthropic activities.
*Tom Cole, 54, who currently serves as chairman of Federated Logistics & Operations, which includes store design and construction; the Federated Systems Group and the company's Financial, Administrative & Credit Services divisions. Cole will continue to be responsible for these support operations as vice chairman.
*Janet Grove, 51, who has served as chairman of the New York- based Federated Merchandising Group (FMG) since 1998. She will maintain responsibility for FMG, which encompasses the company's merchandising, private brand and product development operations.
*Susan Kronick, 51, who has been group president for regional department stores since April 2001. Under the new management structure, she will be responsible for all of the company's department store divisions - Macy's East, Macy's West and Bloomingdale's, as well as Burdines, The Bon Marche and Rich's/Lazarus/Goldsmith's.
"I am very pleased that the board has chosen Terry Lundgren to succeed me as chief executive officer," Zimmerman said. "There is no one more qualified or deserving. Terry's contributions to Federated since becoming president in 1997 have been significant, including spearheading our private brand merchandising and overseeing our strategic department store initiatives. Terry's vision is for Federated to continue to reinvent department store retailing and as CEO, I am confident that his creative vision and strong executive leadership skills will serve the company well in the years ahead."
Speaking on behalf of the company's Board of Directors, Joseph A. Pichler, chairman/CEO of the Kroger Co., said the board believes that "this succession process has continued Federated's history of pursuing strong corporate governance practices that will lead to a seamless transition."
Pichler called Zimmerman "a chief executive of enormous talent and integrity, whose leadership has made Federated one of the nation's most successful retail companies. Under his leadership, the company has more than doubled in size, and has grown its operating income from about $250 million to $1.3 billion. This succession plan enables Federated to continue benefiting from Jim Zimmerman's expertise through the transition period, while turning the CEO's role over to an exceptionally well-qualified and proven retail executive in Terry Lundgren."
Lundgren, commenting on his election as Federated's CEO, said, "I am extremely pleased and honored that the board has placed this trust in me. Federated is where I started my retail career, and I am proud and delighted to succeed Jim Zimmerman as CEO. I have been fortunate to have the opportunity to work closely with Jim over the last nine years, and look forward to continuing that relationship for the foreseeable future. I also feel fortunate to have such an incredible wealth of talent in the five vice chairmen, as well as in Karen Hoguet, our chief financial officer, and our division principals, each of whom will play key roles in setting our corporate priorities and implementing our future strategies.
"I am committed to the continued success of this company and to all of the outstanding people who shape and define it for our customers in countless capacities every day," Lundgren added. "Together, we will continue to build on Federated's considerable strengths as we work hard to ensure its future success."
In addition to chairing the board, Zimmerman, 59, will work with Lundgren on overall corporate strategic initiatives during the transition period, which he said would be no longer than a year. In a communication to Federated employees today, Zimmerman said he has had numerous conversations with the Federated board about his intention to step down in this timeframe, reflecting his "personal goal to retire by age 60 and spend the next 10 years of my life doing something new, challenging and totally different." Although he has no specific plans at this time, Zimmerman said he will continue to make Cincinnati his permanent home and plans to remain active in the Cincinnati community.
Terry J. Lundgren
Lundgren is a native of Long Beach, CA, and a graduate of the University of Arizona. He began his retailing career with Bullock's, a former Federated division, in 1975. After having held positions of increasing responsibility within the stores and merchandising organization over the next decade, Lundgren was named vice president and general merchandise manager of the Los Angeles-based division in 1985. In 1987, he was named president of Bullocks Wilshire, then a specialty department store chain owned by Federated.
Lundgren left Federated after its 1988 acquisition by Campeau Corporation, and became executive vice president of stores for Neiman Marcus. He was named chairman/CEO of Neiman Marcus in 1990, before returning to Federated in February 1994 as chairman/CEO of the Federated Merchandising Group (FMG) prior to Federated's acquisition of Macy's. He became president and chief merchandising officer of the company in 1997, and added responsibilities as chief operating officer of Federated in 2002.
Thomas G. Cody
Cody, a native of New York City, joined Federated in 1982 as senior vice president/general counsel and corporate secretary, after having served in a similar capacity for Pan American World Airways, Inc. He joined Pan Am in 1976 as assistant general counsel after having practiced law in New York, and teaching law at both St. John's University School of Law, from which he had graduated in 1967, and Fordham Universities Schools of Law. Cody is a graduate of Maryknoll College, Glen Ellyn, IL, and St. John's University School of Law.
Cole began his career at Federated in 1980 as vice president/controller of the company's then-I. Magnin division in California. This followed eight years in various positions at the former Allied Stores Corporation. From 1983-87, Cole was senior vice president/finance and administration at FMG. He moved to the Lazarus department store division as senior vice president/financial services in 1987 and from 1988-95, served as president of FMG. He was named chairman of Federated Logistics & Operations in 1995, and assumed additional responsibilities for the Federated Systems Group (FSG) in 2001 and Federated's Financial, Administrative and Credit Services (FACS) division in 2002.
A native of St. Louis, MO, Cole is a graduate of Kent State University.
Grove began her retail career in 1973 in the executive training program at Macy's West in San Francisco. Over the next 19 years she held various positions of increasing responsibility there, ranging from assistant buyer and sales manager to general merchandise manager. Grove joined Federated as senior vice president of center core merchandise at FMG in 1996, after having served as executive vice president for home and center core merchandise at Broadway Stores for the four years (1992-96) prior to its acquisition by Federated. She was named chairman of FMG in 1998, and added CEO responsibilities for the division in 1999. Grove, a native of northern California, holds a degree in marketing from California State University in Hayward.
Kronick began her retail career with Federated in 1973 as an executive trainee at Bloomingdale's. In 1985, she was named operating vice president/divisional merchandise manager, followed by a promotion in 1988 to senior vice president/divisional merchandise manager. After serving as executive vice president/general merchandise manager from 1990-91, Kronick was named senior executive vice president/director of stores for Bloomingdale's. Federated named Kronick president of its Atlanta- based Rich's/Lazarus/Goldsmith's (RLG) division in 1993, a position she held until being named chairman of Burdines in Florida in 1997. She was named to a corporate-level position as group president of Federated in 2001, responsible for overseeing the company's regional department store groups - RLG, Burdines and The Bon Marche. A native of New York, Kronick is a graduate of Connecticut College.
Ronald W. Tysoe
Prior to being named vice chairman of Federated in 1990, Tysoe held a variety of senior executive positions at Campeau Corporation, where he rose to the position of president and chief operating officer. He also served as president of Campeau U.S., the company's U.S. holding company at that time. From 1986-88, Tysoe also served as vice president, treasurer, principal financial officer of Allied Stores Corporation, which later became part of Federated. A native of Vancouver, British Columbia, Tysoe received his undergraduate degree in commerce and his law degree from the University of British Columbia. Tysoe has served on Federated's board of directors since 1988.
Career Highlights: Jim Zimmerman
Jim Zimmerman, then 44, moved to Federated's corporate office in June 1988 as the company's president and chief operating officer after serving for the previous eight years as a principal of its Atlanta-based Rich's division. Zimmerman became Federated's chairman and chief executive officer in May 1997. In Zimmerman's 14 years as Federated's president/COO and then as chairman/CEO, the company:
*Successfully emerged from bankruptcy reorganization as an independent, publicly traded company listed again on the New York Stock Exchange
*More than doubled in size to become America's largest and most successful operator of fine department stores. Sales have grown from $7.58 billion in fiscal 1989 to $15.44 billion in fiscal 2002. Operating income has increased from $249.5 million in fiscal 1989 to $1.34 billion in fiscal 2002.
*Acquired Macy's, Broadway Stores and Liberty House, among others.
*Expanded Bloomingdale's to new markets, including California.
*Strengthened its regional department store nameplates, brand identities and market presence.
*Completed significant multi-year remodels of its highest volume locations - Bloomingdale's 59th Street in New York, Macy's Herald Square in New York and Macy's Union Square in San Francisco.
*Launched an integrated national bridal gift registry system with online and in-store access.
*Improved operating efficiencies dramatically by embracing new technology and building highly professional support divisions in areas such as credit, systems, distribution and logistics.
*Strengthened its management team through improved training and development, as well as enhancement of career paths within the organization. The Federated Leadership Institute was developed, launched and expanded.
Career Highlights: Terry Lundgren
Terry Lundgren returned to Federated in February 1994 as chairman of the New York-based Federated Merchandising Group after serving as chairman/CEO of Neiman Marcus. He was elected Federated's president/chief merchandising officer in 1997, and added responsibilities as chief operating officer in 2002. Lundgren, in his eight years as the company's senior executive merchant and then in his expanded role as president/COO, is primarily credited with:
*Successfully integrating the operations of Macy's, Broadway and Liberty House stores into Federated operational systems and organizational structure.
*Benefiting gross margin performance through aggressive inventory management.
*Developing a strategy for reinventing the department store, including merchandising, store design and visual presentation concepts that were piloted under his leadership and are now being rolled out to Federated stores nationwide.
*Developing Macy's and Bloomingdale's into leading national retailing brands.
*Developing branding strategies for the company's national and regional department store divisions, and extending the reach of these brands through integrated direct-to-customer retail channels.
*Accelerating development of private brand merchandise sold nationwide by Federated's department store divisions. Private brand merchandise sales, at retail, now represent $2.2 billion or 16.4% of total sales.
*Partnering closely with key vendors to bring new, unique and exclusive branded merchandise to Federated stores, resulting in differentiation and newness of fashion.
*Increasing Federated's investment in technology and marketing.
*Launching an integrated national bridal gift registry with online/in-store access.
*Introducing a myriad of successful new merchandise brands, including Greendog for kids, Alfani for men and women, Tools of the Trade and The Cellar in housewares, and JM Collection in moderate women's apparel.
*Extending the reach of Federated's private brands internationally in partnership with leading department store retailers in Japan, Canada, Australia, Peru and Chile.
*Focusing more intensely on strategies to simplify pricing for the customer, including developing and launching a Best Values program of consistently low pricing on key items, widespread installation of price scanners on the sales floor, and reduction in coupon-based promotions.
Federated, with corporate offices in Cincinnati and New York, is one of the nation's leading department store retailers, with annual sales of more than $15.4 billion. Federated currently operates more than 450 stores in 34 states, Guam and Puerto Rico, under the names of Macy's, Bloomingdale's, The Bon Marche, Burdines, Goldsmith's, Lazarus and Rich's-Macy's, as well as macys.com and Bloomingdale's By Mail.
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