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DH taps Ahlers; move seen as plus for dept. stores.

NEW YORK--Stephen E. Watson resigned last week as chairman, president and chief executive of Dayton Hudson's department store division, fueling speculation among analysts about whether the division may be put on the block.

Dayton Hudson immediately named Linda Ahlers, long-time merchandising executive for Target, president of the department store group, which comprises Dayton's, Hudson's and Marshall Field's. The appointment makes her the top woman department store executive in the United States.

The resignation of Watson intensified speculation about whether the department stores will be sold and the company's discount store division strengthened [story, page 9].

Although there has been persistent talk among analysts that Dayton Hudson may put the department store division up for sale, the company has consistently denied that it is looking to unload the division. A spokeswoman for the company confirmed this position in the wake of Watson's resignation.

Now, analysts say the appointment of Ahlers indicates that Dayton Hudson intends to strengthen the department store division before deciding whether to sell it off.

In addition to the 64-unit-department store division, the Minneapolis-headquartered chain also has nearly a thousand discount stores--670 in the Target division and 295 in the Mervyn's division.

Ahlers will report to Robert Ulrich, chairman and chief executive of the corporation, which some analysts say indicates that Dayton Hudson's three divisions will work even more closely together. The title of chairman and chief executive of the department store division has been eliminated.

Ahlers has been with Dayton Hudson for nearly 20 years and worked closely with Ulrich at Target before he was appointed chief executive of Dayton Hudson Corp. She joined Target as senior buyer in 1977 from H.C. Prange department store. She held a variety of merchandising positions at Target, primarily in the hard lines areas. In addition to becoming senior vice president of hard lines, she also worked in merchandise planning for inventory management for all Target stores.

"Stephen Watson is a very capable merchant, but he perhaps no longer fitted the strategy that Dayton Hudson was embarking on," commented Walter Loeb, president of Loeb Associates, a Manhattan-based retail consulting firm. "Ulrich is going to mold the department stores to his wishes or the department stores will be sold."

Loeb added that Ahlers comes out of Target. "She'll add some of the fast-moving systems Target has," Loeb said. "She will add more momentum."

The department store unit has had a mediocre showing for more than a year, with weak same-store sales as well as operating profits that declined last year to $158 million from $270 million in 1994. Wall Street has urged Dayton Hudson to sell off its department store division, and May Co. and Dillard's are among likely buyers.

Dayton Hudson plans to open 65 to 75 more Target stores this year, with a strong thrust in the Mid-Atlantic States. It has said it will open four department stores and four to six Mervyn's stores.

Several analysts see the naming of Ahlers as an attempt to bring the department stores some positive influence from Target before deciding whether to keep or sell off the division.

However, Saul Yaari, an analyst at Piper Jaffray in Minneapolis, expects the corporation to hold on to the division.

"They are committed to keeping the division because the fashion image of the department store helps Target's soft lines," he said.

Target, analysts point out, is the most fashion-forward of the major discounters. The fact that a merchandiser instead of a systems person was chosen indicates a search for cohesion and perhaps "cross-fertilization" between the divisions in that area.

"Linda Ahlers brings a strong track record and significant experience in merchandising to her new position," Ulrich said in a statement issued by Dayton Hudson. "She has distinguished herself throughout her career with the corporation, and I believe the department stores will be well served by her leadership."

Watson was named president of the department store division in 1990. He had been chairman and chief executive of the department store division since 1985. He began at the company as assistant buyer and held many merchandising and marketing positions throughout the company.

In a telephone interview, Watson said of his resignation: "The time was right. Dayton Hudson, over the past several years, has been working to pull its three divisions closer together and the need to have a CEO of the department stores, as well as of the corporation, just doesn't exist."

He added, "There's no relationship between my resignation and the sale of the department store division."
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Title Annotation:Dayton Hudson names Linda Ahlers department store group president
Author:Erlick, June Carolyn
Publication:HFN The Weekly Newspaper for the Home Furnishing Network
Date:Mar 4, 1996
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