Macys has been struggling to adapt to changing consumer demands

Macy's has been struggling to adapt to changing consumer demands

Terry Lundgren, the CEO of US department store retailer Macy's, is to step down after 13 years at the helm, making way for Jeff Gennette to step into the role. 

Lundgren, who has held the role of CEO since 2003 and chairman since 2004, will transition the position of CEO to Macy's current president Gennette in the first quarter of 2017. The move is part of a succession plan that included Gennette's election as president in 2014, and is intended to support upcoming − but as yet unannounced − strategies for business improvement. 

Beyond the first quarter of 2017, Lundgren will continue as executive chairman and work side-by-side with Gennette as president and CEO.

UBS Investment Bank analyst Michael Binetti describes Gennette's appointment as "a fairly natural transition," adding that his 33 years at Macy's "should minimise disruption during the transition."

That said, he also notes: "Gennette takes over amid historic challenges (steepest same-store sales (SSS) declines since recession lately) − and will likely have to articulate an acceleration of initiatives to reduce the store count and bolster seemingly structural SSS headwinds to put the stock on a more sustainable positive trajectory."

The company has been struggling to adapt to changing consumer demands, and last month recorded its worst quarterly sales since the recession. Earnings fell to US$116m from $193m a year earlier, while sales dropped 7.4% to $5.77bn as a result of 41 stores closures in 2015.

Lundgren said of his move: "I have been honoured to lead this enterprise through a period of unprecedented reinvention. While our company is larger, stronger and more resourceful than we were 13 years ago, 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.

"Our company must and will change in response to the profound secular forces that are driving consumer spending. I am firmly committed to, and invigorated by, the process we have begun to set a going-forward strategy in lockstep with our evolving customers."

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