Federated Chief To Bow Out Questrom’s Departure Catches Wall Street By Surprise
Allen Questrom will step down as chairman and chief executive of Federated Department Stores Inc., ending a 30-year career with the company he helped pull from bankruptcy and grow into one of the nation’s premier retailers.
Questrom, 57, will leave in May, handing over the responsibilities to James M. Zimmerman, who as president and chief operating officer since 1988 also played a large role in Federated’s recent turnaround.
Wall Street was stunned by Thursday’s announcement of Questrom’s departure, but analysts said the new management team would likely follow through with the company’s plans for earnings and growth.
“What’s surprising is the timing of this announcement, although he’s been signaling he may leave,” said Walter Loeb, who heads the retailing consulting firm Loeb Associates. “But Federated is in good hands. Zimmerman is a veteran and there won’t be any radical changes.”
Federated shares fell 62-1/2 cents to close at $31 on the New York Stock Exchange.
Questrom came to Federated in 1965 as an executive trainee in its Abraham & Straus division, and spent much of the next three decades with the company, only leaving briefly in 1988 to head Dallas-based Neiman Marcus.
When he returned in 1990 as chairman and CEO, he helped guide the Cincinnati-based retailer out of Chapter 11 bankruptcy reorganization and presided over a period of major growth as Federated bought R.H. Macy & Co. Inc. and Broadway Stores Inc.
Working behind the scenes during these monumental changes at Federated was Zimmerman, 52, who’s known for his keen sense of planning.
“Zimmerman is the equal partner with Questrom in all of their achievements,” said Kurt Barnard, president of Barnard’s Retail Marketing Report, an industry newsletter. “He’s almost artistic in executing strategy.”
Zimmerman said Thursday that he’d continue to explore growth opportunities for Federated, whether it may be acquiring other retailers, refurbishing existing stores or probing the role of the Internet.
“The industry is indeed consolidating,” Zimmerman said. “We made our bed in department store retailing and now we have to lie in it.”
Zimmerman will take over for Questrom on May 16 at Federated’s annual meeting. The company’s board of directors already has approved the management changes.
The company also announced Wednesday that Terry J. Lundgren has been appointed president and chief merchandising officer. Lundgren, 44, has been chairman of the company’s New York-based Federated Merchandising and Product Development division since February 1994.
In a statement, Questrom said he initiated the management transition and has helped plan for a smooth transition. He said he only planned to serve for five to eight years at the helm of the company.
Questrom plans to take time off to travel before looking for other challenges.
Federated has annual sales of more than $15 billion, operating more than 400 department stores and 150 specialty stores in 36 states. Its stores include Bloomingdale’s, The Bon Marche, Burdines, Goldsmith’s, Lazarus, Macy’s, Rich’s and Stern’s.