Macy’s (M) longtime CEO, Terry Lundgren, will step down in early 2017 as the department store looks to shake an unusually prolonged and deep sales slump.
Lundgren, who became CEO in 2003 and chairman the following year, is credited with ushering Macy’s into the e-commerce era, investing heavily and earlier than most rivals in the integration of store and digital sales. The result is that Macy’s is now the No. 6 online store in the U.S. On Lundgren’s watch, Macy’s has also begun an international expansion.
But the company has also struggled in recent quarters as discount chains like T.J. Maxx (TJX) and Amazon.com (AMZN) have eaten into Macy’s leading position as an apparel seller. It has also been hurt by shifting consumer spending patterns to categories like home improvement.
Macy’s has reported five straight quarters of comparable sales declines, and the retailer is set to be surpassed by Amazon next year as the top seller of clothing. Lundgren has also come under pressure from activist investor Starboard to sell off Macy’s best locations to give the slumping stock a lift.
“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,” Lundgren said in a statement.
Lundgren, who will stay on as executive chairman, will be succeeded in the first quarter of 2017 by Jeff Gennette, a highly respected merchant (as was Lundgren) and operator who was named president two years ago, setting him up to become the next CEO. Gennette is a true Macy’s veteran, having been with the company for 33 years.
On Lundgren’s watch, Macy’s annual sales doubled to about $28 billion, in part by creating a national retailer following the purchase in 2005 of May Department Stores.