Shoppers explore a nearly empty mall in Columbus, Ohio.
Matthew Hatcher | fake images
Don’t expect the stream of departures from top retail executives to stop any time soon.
Already this year, Gap and Bed Bath & Beyond were abruptly replaced by their CEOs as the companies’ sales plummeted. stop the game fired its CFO amid the video game retailer’s efforts to revamp its business. After staying on to help Dollar General navigate the pandemic, the The company’s longtime CEO said he was retiring.
As the retail sector faces an increasingly challenging landscape, experts say executive shake-ups are likely to become more common. The stimulus spending that boosted sales during the pandemic will no longer mask underlying trade struggles. Rising inflation raises fears that buyers will cut back on spending. And after the stress of the past two years, some executives are ready for a change of pace.
“Retail CEOs are going to have to earn their jobs and earn their money, because their jobs have gotten a lot harder in the last six months,” said John San Marco, a senior research analyst who covers the retail industry at Neuberger Berman.
What is driving the exodus of retail executives?
With the retail industry facing increasing challenges, the exodus of executives is not likely to stop anytime soon.
Scrutiny from activist investors is one reason executives could be out of a job.
Company boards are also holding executives accountable for poor performance.
In some cases, longtime executives are retiring after pandemic burnout.
Wall Street is also becoming wary of the retail industry as the economic backdrop becomes more choppy. Shares of the S&P Retail exchange-traded fund are down 30% so far this year, worse than the S&P 500’s 18% decline over the same period.
As pressure mounts for retail executives to drive growth, there’s a greater chance they’ll disappoint boards and shareholders and be shown the door, San Marco said. In other cases, executives may see the writing on the wall and want to leave while they’re still at the top.
Here are three reasons industry executives might be looking for a new job in the coming months.
1. Activist Heat
Some executive restructurings are the culmination of intense scrutiny by activist investors.
“If your share price has crashed, if your market value is less than your earnings, you will be a target for activists,” said Catherine Lepard, a partner in the retail practice of Heidrick & Struggles, which helps boards of directors. of companies with succession planning and executive search.
A Bed Bath & Beyond store is seen on June 29, 2022 in Miami, Florida.
Joe Raedle | Getty Images News | fake images
Bed bath and beyondfor example, he became the target of Chewy co-founder Ryan Cohen, whose RC Ventures amassed a nearly 10% stake in the company. Cohen pushed for changes, including spinning off or selling the company’s baby-goods chain and cutting CEO Mark Tritton’s salary.
About three months later, Tritton was expelled as sales declines persisted, losses mounted and inventory built up. Sue Gove, an independent board director, was installed as interim executive director.
Cohen also raised the temperature stop the game after buying shares of the traditional video game seller. He was tapped to lead its digital push as chairman of its board, and the company landed a list of new leaders, including Amazon veteran Matt Furlong who became its new CEO and Mike Recupero, also from Amazon, who became its CFO.
More changes followed, including Recupero’s firing. earlier this monthjust one year after joining the company.
dollar tree, which had fallen behind rival Dollar General, also made radical changes in its leadership after being caught in the crosshairs of an activist investor. The company has reached an agreement with investment firm Mantle Ridge by adding seven new directors to its board. In late June, Dollar Tree said so too would get a new batch of leaders.
A Kohl’s store in Colma, California.
David Pablo Morris | Mayor Bloomberg | fake images
Kohl’s it also came under scrutiny from hedge fund Macellum Advisors, which for months pushed the retailer to chase a sale and shake up your directory listing. The retailer managed to re-elect its slate of 13 board members earlier this year. But last week said its chief technology and supply chain officer is leaving.
David Bassuk, global co-leader of AlixPartners’ retail practice, said the attention of activist investors in retail is increasing pressure on company boards across the industry.
“There’s a lot of concern going into the third and fourth quarters. It won’t be easier any time soon,” he said.
A survey of 3,000 business executives conducted this fall by AlixPartners found that 72% of CEOs said they were worried about losing their jobs in 2022 due to the disruption. That’s more than the 52% who said the same in 2021.
2. Patience is exhausted by poor performance
When a retailer posts consecutive quarters of slow sales, fails to turn a profit, or falls behind its competitors, churn in the C-suite becomes more likely.
Craig Rowley, senior client partner at recruitment consultancy Korn Ferry, likened the dynamic to what happens in sports: “If you have a team and for three or four years you don’t win, what do you do? You change the coach.”
Earlier this month, Gap said its executive director, Sonia Syngal, resigned after the company’s Old Navy business saw a new strategy fail. Old Navy, once a growth engine for the company, hlarge size insert ad to attract more customers. But the effort left the chain with too many clothes in larger sizes and not enough of the sizes customers wanted.
Syngal has been replaced by Bob Martin, executive chairman of the Gap board, as interim CEO. Old Navy CEO Nancy Green had already left just a few months earlier.
After struggling to become a profitable luxury resale retailer the real real it also announced in early June that founder Julie Wainwright would be stepping down as CEO. Chief Operating Officer Rati Sahi Levesque and Chief Financial Officer Robert Julian have been named interim co-CEOs.
As the pandemic sales surge fades, Neuberger Berman’s San Marco said old leaders are being pushed out and new ones are being brought on board to reduce expenses and reduce physical footprints.
“Some of the CEO changes have taken place in companies that are likely to end up much smaller than they are today,” he said.
victoria’s secret could offer a playbook for some retailers, San Marco said. The lingerie retailer spun off from its parent company and assumed new leadership after losing customers to more modern rivals.
In the past week, the company appointed executives in three new leadership roles. He also announced that he would cut about 160 management positions, or about 5% of his head office staff, to streamline operations and reduce expenses.
3. Pandemic exhaustion
In some cases, longtime retail leaders are also deciding to leave voluntarily after helping companies through the pandemic.
Among those who have resigned after long tenures are those at Walmart. former CFO Brett BiggsHome Depot former CEO Craig Menearand, most recently, Dollar General CEO Todd Vasos.
Some companies have asked executives to delay retirements for the past 18 months to help solve supply chain problems, labor shortages and more, said Lepard of executive search firm Heidrick & Struggles.
Now Lepard expects more delayed retirements to be announced, along with executives seeking a slower pace after exhaustion from the pandemic.
“The last two years for CEOs have been exhausting,” he said, adding that the departures will make room for new talent.
As the risk of an economic slowdown looms, he said more boards are looking for leaders with a strong track record of operational execution and financial discipline.
Retailers are also increasingly turning to outsiders to steer their businesses in new directions, according to Bassuk of AlixPartners. Walmart, for example, hit ex Paypal executive John Rainey, who started last month as the company’s new chief financial officer.
In the past, Bassuk said companies weighed whether to select executives with sales or operations experience.
“That’s not the debate anymore,” he said. “Now, companies want someone from another industry to come up with new ideas.”
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