Macy's CEO Lundgren to Step Down Next Year--2nd Update

By Austen Hufford 

Macy's Inc. Chief Executive Terry Lundgren will step down from that role next year, as the company struggles to adapt to changing consumer demands.

Company President Jeff Gennette will take over as CEO, a move the company said was part of its succession plan. Mr. Lundgren, who has been CEO since 2003, will remain chairman.

Shares of Macy's rose 3.5% to $33.94 in early trading. Even factoring in that move, the company's stock has lost roughly half of its value in the past 12 months.

In May, Macy's, the country's largest department-store chain, reported its worst quarterly sales since the recession, setting off fresh fears about the health of the U.S. retail sector.

Many of America's traditional retail stores have struggled to adapt to the shift toward online shopping and fast-fashion chains. Many have responded by closing weaker locations and investing in e-commerce but the moves haven't been enough to counter weak demand.

"Now is the time to reset our business model to thrive in a future that is being driven by rapid evolution in consumer preferences and shopping habits," Mr. Lundgren said.

Mr. Gennette, who is 55, was named president of Macy's in March 2014 after being chief merchandising officer since 2009. He began his retail career in 1983 as an executive trainee at Macy's West.

Under Mr. Lundgren's tenure, Macy's in 2005 -- then called Federated Department Stores Inc.-- bought rival and No. 2 department store chain May Department Stores Co. for about $11.5 billion.

The company also doubled down on its Macy's brand, changing its corporate name from Federated and rebranding its regional stores to the Macy's nameplate.

When Mr. Lundgren took the over helm, Macy's operated about 394 department stores and 61 specialty stores and brought in $15.44 billion in revenue. Today, Macy's operates about 870 stores under its namesake brand as well as Bloomingdale's. In 2015, Macy's net sales stood at $27.08 billion.

Write to Austen Hufford at [e-mail]

(END) Dow Jones Newswires

June 23, 2016 10:13 ET (14:13 GMT)

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