Summoning The Courage To Change—The Time Is Now

If it isn’t already, evolution should become the most important word in your vocabulary as a leader, as forward-thinking brands will continue to rise to prominence amidst every consumer-focused company emerging from this first fight with COVID. I saw this quote recently:

“Experience is a hard teacher because she gives the test first, the lesson afterward”

Nothing could be more valid for businesses in the current environment. Naturally, this leads me to ask a question you’ve asked yourself many times over by now—how is your company doing during the biggest stress test we have ever experienced?

The stress associated with these rapid changing, seemingly daily events across the country only emphasize the need for better, open-minded leaders and having the right people in place to think strategically and act tactically. This crisis has only affirmed the value of digital capabilities in every function no matter how large or small your business is. Artificial intelligence and the importance of data will supersede old management behaviors as most executives have relied on their experience and instincts. The analysis and evaluation of your organization’s stress test to operate remotely will present an opportunity for improvements in systems, supply chains, marketing/communications, and operations. But undoubtedly, the biggest factor above all will be leader performance. Do you have the right people in place who have risen to the challenge or did you experience limitations and lack of performance?

From the consumer perspective, the analysis from the past two months has become clear. Companies with diversified merchandise categories that appeal to a wider customer audience have fared better than others. Grocery, drug, and hardline companies have taken center stage while the apparel and fashion businesses have become unessential and not important. Nearly every retailer has experienced new norms for commerce: longer fulfillment times, drive-through shopping, reduced hours and massive store closures. Omni-channel players have seen an uptick in their e-commerce sales, but not nearly enough to compensate for the loss of sales in the stores. Pure-play retailers have seen their financial valuations skyrocket. The epidemic that has changed everything for the past two months has widened the gap in retailing between the frontrunners and everyone else.

The time is now—as discussions are happening on how retailers and consumer companies will reopen, assess your leadership and ask if the perfect trailblazer is in place as your business begins to recover. E.A. Hughes can be an impactful resource for you to access the best leaders in the market—many of which have transformed brands long before the pandemic. We would love to see how you are faring and how we can assist in bringing best in class talent to your teams, all while sharing our knowledge of the marketplace as the industry continues along its own, never-ending evolution.

COVID-19 Response

We, the E.A. Hughes family, hope this note finds you and those close to you in good health. There is nothing more important than the safety of our clients, friends, and family during these unprecedented times. With the rapid evolution in the workplace and daily changes in our environment, we want to let you know that we are available to you and prepared to respond whenever you need us.

E.A. Hughes deeply values the relationships we’ve built over the years and we plan to continue making these relationships of the utmost priority in the years to come. Action speaks louder than words, so please reach out and we are happy to help in this time of crisis. Together, we will get through this.

In good health,
E.A. Hughes

Saving Gap: Lots of Opportunity, or Lost Cause?

Heading into the holiday season, Gap Inc. is confronted by major internal challenges — beyond satisfying customers seeking gifts.

By David Moin on November 21, 2019 WWD

With Gap Inc. reporting third-quarter earnings Thursday, investors are looking for answers: Will the spin-off of Old Navy happen as planned by mid 2020 or get postponed; who will be the next chief executive officer, and what’s the strategy for reviving Gap brand?

Gap Inc. — which removed Art Peck as ceo earlier this month, named chairman Robert Fisher interim ceo and pre-reported depressed sales across core divisions — must decide whether to seek a merchant leader for ceo, cast a wider net, or consider an insider.

One possibility is postponing the public spin-off of Old Navy, initially seen occurring in the first half of next year, and shifting Sonia Syngal, president and ceo of Old Navy, to ceo of the overall group. Postponing makes sense considering the business at Old Navy, which accounts for almost half of Gap Inc.’s $16 billion in annual sales, has softened this year and there’s little market receptivity to initial public offerings.

For the third quarter, when comps fell 4 percent, 50 cents to 52 cents in earnings per diluted share are expected, compared to 69 cents in the year-ago period. Gap Inc. reduced its earnings outlook for 2019 to $1.70 to $1.75 per diluted share, from an earlier $2.05 to $2.15 projection. The stock closed at $16.28 Wednesday and has ranged from $15.11 to $31.39 over the past 52 weeks.

“Sonia knows Gap Inc. inside-out. She’s super strategic and she’s been a rock star at Old Navy, but you can’t take Old Navy public without Sonia there as ceo,” said a retail executive with knowledge of the inner workings of Gap Inc.

While Syngal is considered a strong supply chain and operations executive, not a merchandiser, many believe Gap Inc. would best be served by a merchant leader, someone like the legendary Millard “Mickey” Drexler, who catapulted the Gap brand in the Eighties and Nineties and launched Old Navy and Madewell. But it’s slim pickings out there. Gap Inc.’s last three ceo’s — Peck, Glenn Murphy and Paul Pressler — were all nonmerchants and unable to turn around Gap brand, stoking some perceptions that Gap is unsalvageable.

Nevertheless, industry sources contacted by WWD over the last several weeks had no shortage of ideas on how to revive the brand and generally expressed hope.

“Gap has lost its identity,” said Robert Burke of Robert Burke Associates. “Right now, I am not sure what Gap stands for. If it’s unclear to people in the industry then it’s really unclear to customers. Gap was one time at the forefront of marketing, with its TV commercials and collaborations. That’s gone away. Gap needs to redefine who they are. Times have changed and the Gap hasn’t. It’s a combination of things that need to be done. There isn’t one magic category. Old Navy has prospered offering product at a price point while still having an image.”

“The Gap needs to study why their stores were once exciting and profitable and an attraction,” said Joseph Cicio, who spent 20 years at Macy’s Inc., rising to senior vice president of fashion direction and creative resources and who ran the former I. Magnin chain. “It was distinctive merchandising, stories, basics, impulse purchasing and merchandising. The Gap needs a major makeover, and it should start with management at the top. New visionary leadership will automatically instill a more progressive merchandising culture. It is not a simple fix, but surely a worthwhile one.”

Other suggestions by Cicio: emphasize volume basics as well as seasonal items, upgrade merchandise presentation standards and reevaluate fixturing and space design.

“Gap has amazing brand equity,” said one retail marketing executive who requested anonymity. “It’s a cross-generational brand.”

“When Mickey Drexler was running Gap, there was innovation, new styles, new ideas, new fashion all the time,” said retail analyst Walter Loeb. “They promoted their great assortment of jeans and it was almost mandatory to shop there. It was a destination. Now I don’t think there is much excitement in the store. They need a fashion designer that could boost Millennials shopping there. The story reminds me of Benetton, which was known for tops and sweaters and after a while lost its luster.”

According to Helaine Suval, partner at WHYZ Partners: “Gap needs to focus on their core customer, listen and deliver what that customer wants. They need to look at the competition and identify their USPs (unique selling proposition) and how they become more relevant to their customer. They have the opportunity to address their product offering, their supply chain and their inventory with a focus on sustainability and social responsibility. Gap should approach this with a focus on optimizing omnichannel, and making their stores more interesting and fun for their customer.”

“Gap Inc. needs a visionary, a merchant, a person with passion for clothes. Gap can’t recover without the right leadership. Art Peck was not a merchant. But these days it’s impossible to find a merchant with a sustained track record of success,” said one former retail ceo.

“The board could be saying, ‘Let’s not be blind to people outside the retail fashion industry,’” said the executive with knowledge of the inner workings of Gap Inc.

Another insider who could be a candidate is Neil Fiske, current ceo of Gap brand. He’s more merchant-centric than Peck and had the benefit of working with Leslie H. Wexner at L Brands, where Fiske ran Bath & Body Works, though he was never a buyer and came from Boston Consulting Group.

Among the recommendations for reviving Gap brand from industry experts:

• Simplify the corporation and cut the fat. It’s an overly complex business with too many people involved in too many projects, hampering the ability to focus on key initiatives. The spin-off of Old Navy is seen as a way to sharpen the focus and streamline the portfolio.

• Double down on denim. It’s the “heartbeat” of the brand and jeans are still the core of America’s wardrobes.

• Find leadership that gives investors peace of mind, conveys that Gap brand is still worth something, and that years of comp-sale declines can finally end.

• Continue to rationalize the store fleet. Gap had roughly 1,500 stores at the turn of the century in North America and now is down to roughly 800. Hundreds more are expected to close.

• Strengthen the notion of Gap brand as timeless, with a classic appeal bridging generations.

• Bank more on the online and outlet channels and less on malls where traffic is slowing and where Gap has historically been concentrated.

• Shine a brighter light on sustainability efforts and taking on social causes, which have been overshadowed by Gap’s poor financial performances. Athleta and Hill City have “benefit corporation” designations allowing them to pursue both profit and social good.

At other Gap Inc. divisions, the $2.5 billion Banana Republic has been showing some improvement and is profitable. Athleta has been on the fast track, with plenty of runway for store growth and is headed to $1 billion in volume soon. The company is also gradually growing Hill City, a men’s counterpart brand to Athleta, with new products and distribution channels.

When the plan to spin off Old Navy was announced, Peck said, “We have made significant progress executing on our balanced growth strategy and investing in the capabilities to position our brands for growth: expanding the omnichannel customer experience, building our digital capabilities and improving operational efficiencies across the company. Today’s spin-off announcement enables us to embed those capabilities within two stand-alone companies, each with a sharpened strategic focus and tailored operating structure. As a result, both companies will be well positioned to capitalize on their respective opportunities and act decisively in an evolving retail environment.”

While the spin-off would be a bold move forward, Elaine Hughes, founder and ceo of E.A. Hughes & Co. executive search, suggested some cultural stagnation. “Everyone has been arrested by a fear of trying something completely new and Wall Street punishing the stock if it is not an immediate success,” Hughes noted. “What is apparent is that those in retailing that are trying something new are winning and in some cases it isn’t purely about product, but also other factors such as convenience and integration of experiences and services. Failure shouldn’t mean death, but a learning experience to create success.”

REINVENTING THE MERCHANT SUITE

The role of retail Merchant Leader continues to be redefined and transformed. Customer expectations are the driving force behind this leadership transformation. Every segment of retailing is challenged with finding Merchant leaders who can inspire young teams, enhance and expedite the product development cycle, define and build desirable proprietary brands and make decisions that are based on facts and analytics. Customers want and expect great products and Merchant teams need to deliver. More than ever, today’s successful Merchant leaders must understand the marketing systems and analytical tools needed to anticipate and exceed consumer needs and create unique and personalized relationships with their audience.

• It is vital that Merchant Leaders know both merchandising and technology. There is a shift from long range planning to real-time action based on real-time data. Successful Merchants need to understand and appreciate technology and use that to empower the business to drive their merchandising skill set.

• Aligning product development with customer demand. It is crucial to stay on top of the latest market and competitive trends and emerging brands to develop a process to efficiently introduce new products to market that will delight the customer.

• Understanding customer complexity. It is not enough anymore to forecast trends, develop product and run a profitable business. Today’s successful Merchant requires a broader business understanding and superior adaptability. Merchant leaders must evaluate and integrate analytics, interpret movements in online shopping behavior, and react to cultural and entertainment trends. They must understand and appreciate financial market conditions that impact spending habits. The culmination of being able to integrate all of these factors with their own customer experiences to make the most impactful business decisions distinguishes the successful Merchant leader from others.

LEADERSHIP CHANGES

JCPenney has embarked on a New Day under the leadership of Jill Soltau as their Chief Executive Officer. In partnership with Jill and the senior leadership of the company, E. A. Hughes was selected to lead the search for their new Chief Merchandising Officer. Michelle Wlazlo was selected into this critical role and is representative of the New Leadership JCPenney has recruited to the company. This success was followed by several noted high-level Merchant searches we conducted. We were able to identify and assess candidates who would bring a New Attitude to the company. They embody the profile of today’s Merchant leaders as JCPenney continues to pivot in their resurgence into 2019 Q4 and 2020.

Michelle Wlazo, Executive Vice President, Chief Merchandising Officer

Wlazlo brings 30 years of merchandising and stores experience to JCPenney from a variety of respected apparel and accessory retailers. Most recently she served as Senior Vice President of Apparel and Accessories Merchandising at Target Corporation where she helped lead the company’s strategy and implementation of a robust merchandising program that included transforming the presentation of 1,400 stores and launching 15 new private brands.

Victor Ejarque Lopez, Senior Vice President, GMM Women’s Apparel

“His appointment fills a vital component of our merchandising leadership team, and we are eager to leverage his broad expertise in women’s apparel as we curate and develop sought-after brands and assortments to make JCPenney a preferred shopping destination for our customers,” said Wlazlo. “He will be an integral part of our senior leadership team as we create an inspirational experience for our customers at every touchpoint.”

Laurene Gandolfo, Senior Vice President for Home Product Design and Development
Gandolfo is a seasoned leader with 35 years of varied retail experience, including over 21 years specializing in the home area at both Macy’s and Bloomingdale’s. In this newly created role, she will apply her significant home experience to re-establish relevance across the Company’s home categories and focus and segment JCPenney brands including JCPenney Home(tm), Cooks(R) and Liz Claiborne(R).

E.A. Hughes & Co. Places Chief Merchandising Officer at JCPenney

E.A. Hughes & Co. is pleased to announce our partnership with JCPenney in placing Michelle Wlazlo as their new Chief Merchandising Officer.


As seen on JCPenney Newsroom February 28, 2019.

PLANO, Texas – (Feb. 28, 2019) – J. C. Penney Company, Inc. (NYSE: JCP) today announced the appointment of three highly talented leaders who will play an instrumental role in the Company’s pursuit of operational excellence and sustainable profitable growth.

Effective March 1, Michelle Wlazlo will join the Company as executive vice president, chief merchant, reporting to Jill Soltau, chief executive officer of JCPenney. Wlazlo brings 30 years of merchandising and stores experience to JCPenney from a variety of respected apparel and accessory retailers. Most recently she served as senior vice president of apparel and accessories merchandising at Target Corporation where she helped lead the company’s strategy and implementation of a robust merchandising program that included transforming the presentation of 1,400 stores and launching 15 new private brands.

Prior to Target, Wlazlo spent 19 years at GAP, Inc. in a variety of roles, most recently as senior vice president GAP global merchandising across all brand divisions including women’s, men’s, kids, baby, body and fit. Over the course of nearly two decades, she held multiple merchandising roles of increasing responsibility for Gap, Gap Outlet and Old Navy. She began her career at Saks Fifth Avenue as a department manager before assuming store leadership and buying roles at Bebe Stores, Inc.

Among those reporting to Wlazlo include Jodie Johnson, senior vice president, general merchandise manager for women’s apparel and interim general merchandise manager for home; Angela Swanner, senior vice president, general merchandise manager for center core, which includes salon and Sephora inside JCPenney; Jeff Useforge, senior vice president, general merchandise manager for men’s and children’s; and Val Harris, senior vice president, product design and development.

The Company also announced that it has filled two additional key senior executive positions:
• John Welling will join the Company on Feb. 28 as senior vice president, planning & allocation, reporting to Therace Risch, executive vice president, chief information officer and chief digital officer. Welling brings over 25 years of experience in retail and consulting, most recently serving as senior vice president of merchandise operations for The Michaels Companies where he led planning, pricing, inventory management and merchandise finance. Prior to The Michaels Companies, he spent over a decade at Walmart serving in executive positions of increasing responsibility, and was a partner at Accenture for their North American retail practice.

• Mark Stinde will join the Company on March 4 as senior vice president, asset protection, reporting to Mike Robbins, executive vice president, chief stores and supply chain officer. Stinde has over 23 years experience in loss prevention and store operations, and is a leading retail expert in asset protection, safety and security. He has a proven track record of significantly reducing shrink levels at leading national retailers. Stinde joins JCPenney from 7-Eleven where he most recently served as vice president of asset protection. He has held various leadership positions of increasing responsibility at Toys ‘R’ Us, The Home Depot, Sears, and Circuit City.

“I’m delighted to announce that these three highly accomplished and esteemed retail experts are joining our organization. Each of these executives will play a meaningful role in our Company’s evolution as we work to build our operational capabilities,” said Soltau. “I’m confident that the addition of our newly appointed leaders will inspire the level of progress and momentum needed to deliver a compelling and rewarding shopping experience for our customers and position JCPenney for success.”

To download a copy of this news release, and access company information, bios and photos, please visit: https://www.jcpnewsroom.com/news-releases/2019/0228_welcomes_chief_merchant.html

E.A. Hughes & Co. Places Female Board Member at American Eagle Outfitters

E.A. Hughes & Co., a division of Solomon Page, places Deb Henretta to the Board of Directors of American Eagle Outfitters. Her broad experience will help drive continued growth and momentum of the American Eagle and Aerie brands.


 

As see on WWD February 15, 2019

American Eagle Outfitters continues to stay on top of the trends.

In addition to recently surpassing $1 billion in sales during a single quarter, the teen apparel and accessories retailer is adding a new face to its board.

Effective Thursday, Deb Henretta is now on the company’s board as an independent director, making the total number of women on the committee three out of eight.

deb-henretta-headshot

Deb Henretta, from WWD

“Deb’s passion for innovation and transforming the customer experience is perfectly aligned with our strategic vision as we continue to grow our leading brands worldwide,” Jay Schottenstein, executive chairman and ceo of American Eagle said in a statement, adding that Henretta’s experience “will add tremendous value to the team.”

“We look forward to benefiting from her insights,” Schottenstein added.

Henretta’s 30-year résumé in the consumer products industry includes a stint at Procter & Gamble as group president of global e-commerce and president of global beauty care. She is also on the board of a number of other organizations, including technology company Corning and real estate firm Meritage Homes.

The seasoned retail executive said she’s “thrilled” to join American Eagle’s board and the chance to work with Schottenstein.

“It will be a privilege to help drive continued growth and momentum of the American Eagle and Aerie brands,” said Henretta, who hopes her experience in branded consumer goods and digital transformation, as well as on other boards, will help shape the customer experience at American Eagle for the better.

“Both American Eagle and Aerie are pushing the boundaries of innovation and speaking to the values of their target customers,” she said.

American Eagle’s existing female board members are Sujatha Chandrasekaran and Janice Page. The addition of Henretta comes at a time when companies are being pressured by shareholders to rethink their top-level talent.

Straddled with #MeToo woesGuess Inc. added two female board members as independent directors last November.

Nike, also no stranger to #MeToo publicity, gave Heidi O’Neill, president of Nike Direct, an updated title the following month. O’Neill, one of Nike’s highest-ranking female executives, is now in charge of not only retail stores and the web site, but also oversees digital products and services.

“Companies are being pressured to diversify,” said Susan Anderson, managing director at financial firm B. Riley FBR. “A lot of it probably has to do with what’s going on politically.”

Still, a lack of female board members throughout the retail industry remains evident. Footwear company Skechers, for example, does not have a woman on its board.

Henretta called her appointment to American Eagle’s board “another terrific sign.”

“It is exciting to see more women earning their way into the boardroom and into leadership positions on these boards,” she said, but admitted that the challenges of creating diverse leadership teams in the retail industry are far from over.

“While there is good progress, there is still more work to be done so that today’s boards and management teams better reflect the diversity of the consumers they serve,” Henretta said.

Article by: Kellie Ell on February 15, 2019

WWD: AMERICAN EAGLE OUTFITTERS ADDS FEMALE BOARD MEMBER