It's a changing of the guard at Macy's Inc. The 870-unit department store chain announced Thursday that longtime CEO Terry Lundgren will be handing the reins to Jeff Gennette, the brand's current president, in the first quarter of 2017.
"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," said Mr. Lundgren, who will continue as executive chairman, in a statement. "Our company must and will change in response to the profound secular forces that are driving consumer spending."
Chief on Mr. Gennette's to-do list is filling the CMO role, which has been vacant since Martine Reardon's departure last month. According to a spokeswoman, a search is still underway. Macy's, which spent $718.8 million on measured media in the U.S. in 2015, according to Kantar Media, recently tapped Figliulo & Partners and BBH New York for its holiday marketing campaign, replacing J. Walter Thompson.
The company is betting on digital, and plans to shift some marketing dollars to digital and social media in the fourth quarter.
"This is the time for us to be laser-focused on what is most important to our customers, and how we can best deliver the shopping experience that will secure our position as the premier omnichannel retailer of the future," said Mr. Gennette, 55, in a statement.
The succession is a development surprising to few, as Mr. Gennette, a 33-year veteran of the retailer, has long been groomed for the CEO role. He was most recently promoted to president two years ago. Yet it is nevertheless a big change for the storied brand, as Mr. Lundgren has been the face of Macy's for 13 years, carrying the company through the recession and digital revolution in retail. In recent years, he's brokered deals with retailers such as cosmetic chain Bluemercury and electronics brand Best Buy, and added outlet divisions, to encourage growth during a time when shoppers are shying away from traditional apparel sellers.
It hasn't been easy. In the first quarter, Macy's saw same-store sales slide 5.6%, the chain's fifth consecutive quarterly decline.
Investors were buoyed by Thursday's news, and sent shares up 4% to $34.10 within an hour of the announcement.
"We view the change as a positive, given Lundgren's continued involvement in the business and Gennette's experience at the organization," wrote Richard Jaffe, a retail analyst at Stifel, in a research report. Yet he cautioned that "driving sales remains an ongoing challenge."