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Latest News - AdAge

Latest news and features from AdAge
Latest News - AdAge
  1. Department store woes worsen; Kohl's, J.C. Penney sales miss

    The optimism for department stores after Macy’s Inc.’s rosier report last week was short-lived, with J.C. Penney Co. and Kohl’s Corp. posting sales declines Tuesday that rattled the industry. Shares of both sank.

    Same-store sales, a key gauge of retail success, missed projections at both chains, signaling the stores still have their work cut out for them as shoppers’ preferences evolve.

    “Last year, shoppers were spending freely and were able and willing to make purchases of discretionary products. While demand has not dropped off a cliff, there has been a material tightening of conditions and sentiment this year,” Neil Saunders, managing director of GlobalData Retail, said in a note. “Some customers are buying less, others have cut out purchases entirely and this has resulted in much softer sales.”

    The weaker-than-expected results come toward the end of what’s been a mixed period for the consumer sector. Retail giant Walmart Inc. last week posted its best first quarter in nine years, propped up by its booming grocery business. Home-improvement store Home Depot Inc. reported a murkier spring. Wall Street will get more data points on the strength of the sector this week, with Target Corp. reporting Wednesday and home-technology leader Best Buy Co. releasing results on Thursday.

    Kohl’s slumped as much as 14 percent and J.C. Penney as much as 11 percent in New York Tuesday. Kohl’s had already dropped 5.2 percent this year through Monday’s close, while J.C. Penney had climbed 11 percent.

    Investors will get another look at the health of department stores after markets close Tuesday, when Nordstrom Inc. will report quarterly results.

    Macy’s "anomaly"
    Macy’s is the “anomaly,” said Poonam Goyal, an analyst at Bloomberg Intelligence, having bucked the earlier assumption that the latest quarter would start off slow given the late Easter.

    “The first quarter just had a lot of headwinds in place that Macy’s had weathered and Kohl’s wasn’t able to weather,” Goyal said. When Macy’s reported, “everyone just assumed that the negative Easter shift that we heard about all quarter maybe wasn’t as negative as everyone had thought,” But that proved not to be the case.

    TJX Cos., which owns Marshalls and TJ Maxx, reported sales that topped projections, a sign consumers are still enticed by the chains’ treasure-hunt shopping experience.

    J.C. Penney’s disappointing results ramp up the pressure on Chief Executive Officer Jill Soltau, who took the top job last fall, to reverse an extended sales slump. She has reshuffled senior management, filling her ranks with executives from retailers such as Macy’s, Target and Walmart. Her latest hire announced Tuesday is Shawn Gensch as chief customer officer, who will be in charge of finding ways to get shoppers in the door.

    There’s a sense of urgency for J.C. Penney investors, as the company is saddled with nearly $4 billion of debt coming due before the end of 2024. The turnaround plan is still taking form, however, with Soltau saying the strategy will be shared with investors “in the coming months.”
    Tariff Impact

    The cloud of the U.S.-China trade war and the proposal from the Trump administration to place 25 percent tariffs on an additional $300 billion of goods including apparel also looms over the industry. Soltau said on Tuesday’s earnings call that J.C. Penney’s private label business could face a “meaningful impact” from the latest proposal. Kohl’s also has a significant private label business, which means more of its goods are sourced directly, Goyal said.

    Kohl’s does have a potential bright spot ahead. The company is ramping up its tie-up with e-commerce giant Inc., and as of July will accept Amazon returns at all of its stores. The idea is customers will browse and buy something while making their returns.

    “Kohl’s is still on the right path to drive sustainable longer term growth,” Goyal said, pointing to the partnership.

    Kohl’s isn’t the only retailer embracing Amazon. Stein Mart Inc., an off-price chain selling apparel and home goods, said Tuesday it would install Amazon lockers in almost 200 of its stores. The news sent shares soaring as much as 38 percent to $1.30, the biggest intraday gain in more than a year.

    —Bloomberg News

  2. The Trade Desk hires ex-Nielsen exec as first-ever CRO

    Ad tech darling The Trade Desk has hired Jonathan Carson as its first-ever CRO, the company said on Tuesday. Carson, a digital media veteran with more than two decades of experience, arrives after leaving Vevo, where held a similar title.

    The Trade Desk has seen rapid and wide-scale adoption from advertisers since going public three years ago, and has grown its revenue nearly 55 percent, from $308 million to $477 million, between 2017 to 2018. The company provides software for agencies and marketers to make programmatic ad buys across areas such as display, mobile and audio. 

    Although the The Trade Desk is on a run, it also faces the challenge of maintaining that growth every three months. Carson, who was previously CEO of Digital at Nielsen, is banking on both the connected TV space and international expansion to sustain such growth.

    “Those are two areas where I’ve spent a good portion of my career," Carson says. “If you look at places where this company can see huge growth, it’s the opportunity around connected TV and international expansion."

    Specifically, Carson says that opportunity resides in ad budgets shifting away from linear TV and toward the connected TV space. “Because connected TV is so nascent, we have the opportunity to construct a transparent, fair ecosystem from day one, as opposed to falling into some of the traps digital or display went through in their first few cycles,” he adds. “The connected TV market is going to look much more like the digital advertising market than the linear TV market.”

    Connected TV’s end game is providing both the technology and scale to programmatically target viewers with video ads on the screen in their living room as to the one in their pockets.

    While connected TV is a promising growth area, The Trade Desk is not without its challengers. Companies such as AT&T and Disney who own all the content would much rather prefer marketers buy through their own platforms. Yet Carson argues that such big players will work with The Trade Desk because of the demand it can potentially generate with its roster of agencies and marketers who use its platform.

    “At the end of the day, sellers are responsive to what the buyers want,” Carson says. “Our proposition to buyers is that we represent them in a completely unconflicted way that many of which will take us up on … My feeling is that will open inventory [from the content providers].”

  3. Dressbarn clothing chain is being shuttered after attempted sale

    Ascena Retail Group Inc. will start winding down its Dressbarn clothing chain, the latest upheaval in a continued retail shakeout.

    After trying to find a new owner, Ascena said Monday that it’s preparing to close the approximately 650-store chain. No timeline was given, and stores will remain open until the wind-down commences.

    Ascena, whose brands have come under pressure as consumer tastes shift, needs to make changes after posting more than $1 billion of losses in the past four years, according to data compiled by Bloomberg.

    “This decision was difficult, but necessary, as the Dressbarn chain has not been operating at an acceptable level of profitability in today’s retail environment,” Dressbarn Chief Financial Officer Steven Taylor said in a statement Monday.

    Bloomberg reported in March that Ascena was exploring options for Dressbarn, which was struggling with a host of competitors from fast-fashion purveyors like H&M to Its demise marks the end of yet another chain born in the New York area, less than a year after the final shutdown of New Jersey-based Toys "R" Us.

    Roslyn and Elliot Jaffe opened the first Dressbarn in 1962 in Stamford, Connecticut, according to the chain’s website, with Rosyln choosing the name shortly before it opened to denote fashion and value. After acquiring several other women’s and kids’ clothing brands, the company reorganized its structure in 2011 and changed its name to Ascena. The Mahwah, New Jersey-based company has built up an array of retail chains, most recently with the 2015 purchase of Ann Taylor and Loft brands.

    Now Ascena has been unwinding some of those purchases. In March, it announced that it sold a majority stake in its Maurices chain to private-equity chain OpCapita for $300 million.

    Details of the closing of individual locations and plans for job cuts will be shared as the wind-down progresses, the company said. The retailer says it will continue to pay its vendors and suppliers in full for products and services during the process.

    —Bloomberg News

  4. IPG's Huge names Pete Stein new global CEO

    Interpublic's Huge has named Pete Stein as global chief executive officer to replace Michael Koziol, who joined the agency last March. Huge said Koziol will be leaving to focus on private equity ventures in retail, e-commerce and media and entertainment.

    Stein's appointment is effective immediately. He most recently was general manager of Fullscreen, a digital video company that manages a network of creators' channels across social platforms like YouTube, Facebook and Snapchat. He is credited with doubling the size of that business, increasing shareholder value and ultimately leading Fullscreen to be acquired by AT&T in 2018.

    Stein previously also spent nearly a dozen years at Publicis Groupe digital agency Razorfish (now part of Publicis Sapient), where he served as CEO from July 2013 to December 2014. He left Razorfish at the start of Publicis' massive restructuring that began with its digital agency properties and led to the formation of its "Power of One" model.

    "Pete is a strong collaborator who builds cultures defined by inclusion, teamwork and growth. We couldn’t be more excited to bring him to our company," IPG Chairman and CEO Michael Roth said in a statement, adding "we thank Michael Koziol for his leadership throughout his tenure at Huge."

    Koziol took over as global CEO last March, when Huge co-founder and former chief executive Aaron Shapiro left the agency after 13 years to pursue a new unspecified venture. It is still unclear what that venture is. According to his LinkedIn profile, Shapiro is still "working on a new company."

    Koziol had joined Huge five years prior to becoming the chief executive and co-founded the agency's Atlanta office.

    Stein will be based in Brooklyn, leading 1,400 people across 13 offices. Huge said his appointment follows recent new wins for the agency including Brooks, Sinai Health Foundation, Value Retail and

  5. What George Costanza taught me about leadership

    Like many Gen X-ers, George Costanza tops my list of fictional anti-heroes. One of my favorite Costanza moments occurs in a famous "Seinfeld" episode when Jerry astutely points out that since every instinct of George is fundamentally misguided, then doing the direct opposite would put him on a path to success.

    I think about this scene often in the context of my own career and how I've advanced in the absence of strong role models along the way. This wasn’t by design. Either I was working at startups with equally blind, young leaders, or I was the leader myself: the blind leading the blind.

    In fact, during the most formidable years of my career, the people above and around me in so-called "mentorship" positions tended to show me what not to do, rather than modeling what I should be doing as a young leader. So, I adopted the Costanza method, with my leadership style taking shape as a counter to my own experiences with mentors.

    Here are the top three leadership lessons I’ve learned along the way:

    Shared values are greater than the cult of personality was one of the first social media companies in the mid-'90s to go public, with a big part of Wall Street’s swooning due to the founders’ cult of personality. I joined the company in 1998 and had a front seat to the action as general manager (which, in a surreal twist of fate, chronicled the drama on National Geographic’s “Valley of the Boom” TV show earlier this year).

    The fast-paced and chaotic culture of The Globe was initially exciting, but it had a precipitous fall due to a confluence of reasons—most notably, rampant employee disengagement that inhibited it from successfully pivoting in a highly chaotic environment. (After all, teams will only buy in when they see a higher purpose of what they’re doing and why they’re doing it.) Moreover, acquirers discount businesses that are perceived to be overly dependent on founders.

    So, when I was scaling 360i six years later, I was committed to leading with mission, vision and values—not personality. This was a rather unique view in the advertising world at the time, where the greatest firms all seemed to center around iconic founders and partners.

    At 360i, I was eager to share the stage with my leadership team so there wouldn’t just be a singular voice at the top. The idea was to elevate different people with different perspectives and backgrounds, all united towards the same mission, vision and values. This not only drove our business growth but it also helped maximize our sale value (we were acquired by Dentsu, Japan’s largest advertising company, in 2010). 

    Meritocracy trumps friendship
    After my stint at The Globe, I joined high-flying dot-com company Net2Phone, which was one of the world’s first VoIP providers. The company grew so fast and its leadership was so insular that candidates seemed to be hired based on whoever had the fewest degrees of separation from the founding team. The company soon became a tangled web of friends and family, with no screening put in place for diversity, let alone competence.

    When I arrived on my first day in early 2000, I’d bet 80 percent of the organization knew each other from personal backgrounds before becoming coworkers. This meant that when it came time for crucial conversations like performance reviews or promotions, the personal clouded the professional, making it near-impossible for meritocracy to reign supreme.

    Not surprisingly, this led to inexplicable promotions and obvious failures.  

    This experience ensured I took an opposite approach to hiring at my future companies. I evangelized formal hiring processes to source and hire the best candidates, mandated real-time, bi-directional feedback and, most importantly, put into place an explicit strategy to promote and root out the best people to create a culture of meritocracy.

    Although this created countless instances where we had to encourage friends and early employees that it was in everyone's interests for them to move on gracefully, it ensured that we constantly had a diverse team with the best possible candidate aligned to every role.

    Candor builds trust
    After one of those many failures from nepotist choices of leadership at Net2Phone led AT&T to lose almost $1 billion in value when it sold its controlling stake in 2001, I was tasked with executing a $100 million turnaround for one of the core businesses and recapitalizing with a public offering. Step one was taking a hatchet to the poisonous culture and instituting a culture of candor, which was polarizing to many, but was absolutely necessary to put an end to the political jockeying and palace intrigue and start having crucial conversations to get the company healthy. 

    I’ve applied these lessons to all of my subsequent leadership roles, whether it was instituting town hall meetings to host transparent and difficult conversations or creating non-hierarchical feedback loops to ensure management was hearing the unfiltered truth from the employee base. Countless articles have been written about the correlation between candor and high performance organizations, yet opacity continues to be prevalent at many companies.

    While I learned from the errors of my bosses, I did so while making many mistakes of my own. Among other things, it took me too long to realize that being a leader is more about inspiring people to believe in why we are doing things than it is directing what to do and how to do it. These unnecessary hardships in my formative years have driven me to invest in mentorship personally as well as a critical leadership framework ever since. A leader is only as strong as his or her ability to scale beyond his or herself.

    Looking back over the last 25 years, what brings me the most fulfillment is not the recognition or financial rewards, but rather watching the continued success of those I’ve mentored grow into their best versions of themselves. It’s the gift that keeps giving. If nothing else, I've learned you don't need to have a mentor to be a mentor.




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