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Troubled Retailer Hires Away Macy Executive

April 29, 1992

NEW YORK (AP) _ Limited Inc.’s flagship Limited store division, which has struggled since sales slumped in 1990, reached outside for help Wednesday, hiring a top R.H. Macy & Co. Inc. merchandising officer.

Roger Markfield, Macy’s executive vice president of merchandising, will become the Limited division’s executive vice president and general merchandise manager.

Markfield is the third important Macy executive to defect from that troubled company in recent weeks.

The appointment came several days after Limited Inc. conceded to securities analysts that it was still having problems with merchandising and fashion selection.

Chief financial officer Kenneth Gilman told analysts in a conference call last week that Limited Inc. chairman Leslie Wexner was dissatisfied with the division’s early fall fashion lines, considering them ″too safe and not fashion forward.″

The division’s problems have hurt the entire company’s sales, and Limited’s forecasts for improvement failed to materialize. That has angered Wall Street, where Limited’s stock price has languished in the low $20 range, compared to a 52-week high of nearly $33.

The company’s stock fell 12 1/2 cents Wednesday to $23.50.

Analyst Bernard Sosnick of Oppenheimer & Co., who conducted the conference call with Gilman, summed up the company’s predicament: ″With each delay in the turnaround expected by the Limited stores division, investors have become exasperated with the company. That feeling reached a boiling point when disappointing sales were reported for the month of March.″

Limited’s sales at stores open at least a year - a widely used barometer of a retailer’s strength - fell 8 percent in March.

The hiring of Markfield, while an obvious move to get the Limited division back on track, may also be an attempt to placate investment firms and stockholders.

Markfield has ″the kind of experience in fashion merchandising that hopefully will go ahead and inject some enthusiasm to take risks,″ said Thomas J. Tashjian, an analyst with First Manhattan Co.

Tashjian said Limited stores have lost the uniqueness that made them the leading specialty apparel retailer in the 1980s.

″The company was willing to take enough risks to be a fashion leader ... They don’t do that anymore,″ he said. ″That lack of aggressiveness has allowed them to slip into the me-too land of retailing.″

In the 1980s, Limited was known for casual wear, but in the past year has switched to a more sophisticated, career look, resembling higher-priced competitor AnnTaylor Stores Inc.

Not all analysts believe merchandising is the problem.

Donald Trott of Dean Witter Reynolds Inc. said that while chairman Wexner scored in the 1980s with new fashions and store presentation, Limited needs a new marketing scheme, including advertising, to rejuvenate.

Trott pointed to the success Gap Inc. has enjoyed from advertising, repositioning itself as a retailer for consumers across the economic spectrum. He warned that unless Limited changes its approach, it could end up ″becoming another General Motors.″

But in its 1991 annual report, Limited said, ″We just cannot prove to ourselves that there’s a legitimate payback″ from advertising.

Gilman also discussed with analysts the problems of another Limited Inc. division, Lerner New York stores. Lerner in the past appealed to low-budget customers who now tend to shop in discount stores, not the shopping malls where most Lerner stores are located.

Limited is trying to reposition Lerner by bringing in more upscale merchandise and redoing its stores, a classic Wexner approach.

However, Trott said, again using Gap as an example, that won’t work unless Lerner also undertakes a big marketing campaign.

″Ninety percent of the market he’s trying to reach wouldn’t be caught dead carrying a Lerner bag,″ Trott said of Wexner. ″(The consumer) has to hear the message that Lerner is something different from what it used to be, so she doens’t have to be ashamed to carry the Lerner bag.″

Limited’s divisions also include the more successful Victoria’s Secret stores and catalog and Express stores.

Markfield’s departure from Macy, which has been in bankruptcy reorganization since January, further depletes the top ranks of the department store company’s merchandising operations.

Ellin Saltzman, the company’s senior vice president and fashion director, left for Bergdorf Goodman, while Robert Friedman, president of merchandising for Macy’s East division, became the chief operating officer of Loehmann’s, a retailer specializing in discounts of designer fashions.

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