Move Said to Be Tied to Brand's Expanded Distribution in Kmart

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COLUMBUS, Ohio ( -- Mindy Meads, the CEO of Lands’ End, left the company late last week and was replaced by David McCreight, executive vice president of merchandising, at the $2.2 billion apparel maker, according to a Sears spokesman.
Industry watchers cite conflict between former Lands' End CEO Mindy Meads and Sears executives as a reason for her abrupt departure.
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Sears acquired Lands’ End for $1.8 billion in 2002 and Ms. Meads took the helm in early 2004, after playing a pivotal role in the Sears apparel division. Until a replacement is found, Mr. McCreight will report to Sears CEO Alan Lacy, said the Sears spokesman, who refused to comment on the details of Mrs. Meads' departure.

Sears, Roebuck & Co. merged with Kmart Holding Corp. earlier this year to create Sears Holding Corp.

Abrupt departure
Industry watchers said Ms. Meads’ abrupt departure followed a battle with Sears executives on expanded distribution of the brand in both Sears and Kmart stores. The internal battle raises the question: If even an insider is questioning the combined value of the Sears/Kmart retail brand, what other brands might follow?

In May, sports apparel giant Nike ended its supplier contract with Sears, calling the action a “brand management decision,” although analysts and industry watchers deemed it the fastest way to distance the brand from discounter Kmart.

Neil Stern, a retail consultant with McMillan Doolittle in Chicago, said Ms. Meads wasn’t willing to “sacrifice” the Lands' End brand for Sears.

“It was a challenge between what was best for the Lands’ End brand and what was best for the enterprise of Sears,” Mr. Stern said. “Clearly, Mindy was someone rooted in what is best for the brand.”

Although Sears boasts Craftsman and Kmart has Martha Stewart, neither has an apparel brand that rivals Lands’ End.

Price integrity
With Ms. Meads gone, Mr. Stern said the Lands’ End brand could lose its price integrity and wind up a much less profitable brand. The bulk of the company’s sales is through catalog and Internet channels and, unlike at retail, is protected from discounting and promotion.

“There is an inherent conflict between the two channels for this brand,” he said. “At retail, you change prices all the time.”

Lands' End spent about $32.7 million in 2004 on measured media, according TNS Media Intelligence, up 17% from $27.9 million in 2003. The retailer and catalog company has been searching for a new agency since Havas' McKinney, Durham, N.C., resigned the business in February.

WPP Group's Grey Worldwide, New York, Kmart's agency, is vying for the account, but a spokesman declined to comment on whether the executive upheaval would impact the ongoing review.

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