Big US retailers encounter difficulties in search of a new CEO
A report of WSJ Wall Street Journal reveals that three prominent US retailers encounter difficulties in search for a new CEO, some of them are engaged in the textile sector
Three large American retailers are searching a new CEO, the companies are Target Corp, department store chain J.C. Penney Co. and teen textile specialist American Eagle Outfitters, but there are around a dozen others hunting for a new chief executive. The reasons why such top openings are available are turnover at the top, in some cases the extended searches for replacement, all also the sign of an industry under pressure and once successful business models are out of pace with Americans’ new shopping habits.
Target is in a changing game that is why it states it would look outside the company, even outside the industry for candidates who can transform the retailer. According to WSJ “this is a remarkable statement for a corporation that has developed its leaders internally for 112 years.”
Actually, Target is being run by CFO John Mulligan, who is serving as CEO on interim basis and he stated that the company needs to move more quickly to test new ideas. Following this, he will focus on completing a revamp of the chain’s cosmetics, baby products and electronics area. Later this year, Target will overhaul its toy aisles and apparel section. The company further plans broader online offerings, including an expanded subscription service that will compete with Amazon.com Inc.’s Subscribe &Save.
The company sacked last Monday its former CEO, 35-year veteran Gregg Steinhafel due to the costly holiday cyber attack into its payment-cards systems. The security breach heightened concerns in view to slipping sales in Target’s U.S. operation, an inferior e-commerce operation, and a money losing bet on an expansion into Canada.
Elaine Hughes, head of E.A. Hughes & Co., a small search firm that specialises in retail, stated: “There are not a lot of sitting CEO candidates who have had extensive experience managing both brick-and-mortar as well as online businesses. She added “Meanwhile, the number of retailers seeking new leaders is the most we have seen in five years.
The challenge at Target reflects a structural change in American retail, with traffic at brick-and-mortar stores moving more to shopping online. Target had outsourced much of its online operation to Amazon in 2011, and has spent lavishly on its e-commerce efforts, but 2013 only 2 % of total sales derived from E-Commerce.
American Eagle was confronted with the rise of cheap fast fashion chains like Forever 21 Inv and Swedish retailer H&M Hennes & Mauritz AB. The company’s CEO Robert Hanson left the company in January as the teen apparel chain struggled with the intensely competitive environment. Sales in the fiscal year ending in February 1, 2014 fell by 5 %.
Also Abercrombie & Fitch Co. is hunting for two brand presidents eventually with the possibility to ascend to the top office.
Of the storm at the top at J.C. Penney, TextileFuture has been reporting extensively. CEO Ron Johnson was replaced by the former CEO Myron Ullman and the search for a new CEO is on since last summer.
Best Buy Co. a struggling electronics chain hired a retail industry novice as CEO in 2012. The Frenchman Hubert Joly previously ran closely held Carlson Cos., a global hotel, restaurant and travel business, he stopped the bleeding first, but lately the company struggles with slumping sales and tight margins amid a fierce price war in electronics.
Toys”R” Us Inc. turned to Antonio Urcelay, head of the company’s European operations, for the CEO position, all after an eight month search.
Mark Cohen, former CEO of Sears Canada and now a professor at Columbia University explains: The talent pool is thinner, talent capacity less and looking outside the industry is not going to work!”