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Edward S. Finkelstein, former chairman and chief executive officer of R.H. Macy & Co., once a towering figure who orchestrated the rise of the retailer in the Seventies and Eighties, died Saturday at the age of 89.
He died of natural causes at his home in Thousand Oaks, Calif., his son Daniel said. A private family service will be held at a later date, according to his son, who said his father had been in ailing health in recent months.
"Ed Finkelstein was an innovator who shall be remembered for his many important contributions in building the Macy's brand over the decades. His career was remarkable. The Macy's, Inc. team extends our heartfelt sympathies to the Finkelstein family," said Terry Lundgren, chairman and ceo of Macy's, Inc.
A complex individual who could be willful and autocratic, Finkelstein nevertheless had a flair for showmanship and innovation. He pioneered The Cellar, a bustling format in the store for dinnerware, kitchen gadgets and food, first at Macy’s San Francisco flagship and subsequently at the Herald Square flagship in Manhattan. He developed a stable of private brands such as INC International Concepts and Charter Club that became industry models. And he would lure uptown socialites down to Herald Square with black-tie dinners that supported charities, spotlighted new departments or launched in-store happenings such as Macy’s annual flower show.
Finkelstein was visionary in other respects too, though some of ideas never took off and were left for others to fully execute. Such was the case with Aéropostale, a concept for private label. Under Finkelstein, Aéropostale freestanding shops were introduced yet never evolved into a specialty force until it was sold off and a former Macy’s executive, Julian Geiger, grew the brand and took it public. Finkelstein was among the first to see the potential for American brands and retailers to enter China, and opened a store there after he left Macy’s, though the store eventually closed.
His maneuvers put a halo on a department store business that formerly lacked panache. He even for a stretch closed the image gap between Macy’s and the more fashionable, hipper Bloomingdale’s, instigating a spirited crosstown retail rivalry that peaked in the Eighties. And those that worked for Finkelstein felt part of a privileged retail pedigree.
“He was truly a merchandising genius with a remarkable, intuitive sense of what the customer wanted and — and even more incredibly — what they would want,” said Don Eugene, a former Macy’s chief financial officer and close lieutenant to Finkelstein for 20 years, now a partner at the Callydus Group LLC consulting firm. “His ability to recognize talent helped advance an untold number of people who have gone on to run major retail organizations,” including Millard “Mickey” Drexler, Art Reiner, Robert Friedman, Rose Marie Bravo, Frank Doroff and Hal Kahn.
“Ed was responsible for taking Macy’s out of its dusty, somewhat stodgy past, and recasting it as a destination offering both [a sense of retail] theater and the latest trends,” added Bennett Gross, also a partner at Callydus, and former financial executive at Macy’s. “His innovations ranged from Macy’s Cellar and the petites business, to realizing that distinctive shopping bags could be walking advertisements and that private label merchandise could be critical to differentiating our stores. More importantly, he both appreciated the heritage and saw the potential.”
As much as Finkelstein’s creativity and nurturing of talent elevated Macy’s, hubris and takeover mania in an era when debt was de rigueur led to an ill-fated $3.6 billion leveraged buyout in 1986. The chain filed for bankruptcy six years later under the weight of debt and overexpansion and Finkelstein experienced a mighty fall from grace. Just a few months into the bankruptcy, Finkelstein sadly departed from Macy’s after 44 years with the store.
He saw the LBO as a solution to some pressing concerns, like losing top lieutenants to other retailers. He also feared a takeover, as Macy’s stock was rising. The LBO would enable him to retain his people, stir their entrepreneurial spirit as investors, and circumvent a hostile takeover. “I was a very careful person about finance and didn’t like debt,” Finkelstein told WWD years afterwards. “But I finally came to the conclusion that since we were sitting with $800 million in real estate, spent so much on remodeling and because we had a strong cash flow, we were a target.”
But it also meant Macy’s would have to satisfy big bank lenders instead of Wall Street, and come up with a game plan for quick sales and profits to pay off debt. Initially, the LBO proceeded well, but around 1990, losses started mounting, disproving overly optimistic projections that were used to sell the buyout to the 300 or so Macy’s managers who invested in Macy’s stock and were pressured into it by Finkelstein.
The bankruptcy left Finkelstein defeated and bitter, partly because he felt some executives whose careers he nurtured went around him to influence the board, made decisions on merchandise behind his back, and ultimately capitalized on his loss of control by landing big jobs and rich severance arrangements after the company went bust, and he left the scene. He said they were “Judases.”
Though he took a tough fall, Finkelstein didn’t disappear from retailing. He became a consultant initially, then truer to his entrepreneurial spirit, he opened a store in China in 1993, years before Gap, Wal-Mart and any high-end European or American designer saw the opportunity. The 3,000-square-foot unit, called The American Place, opened on Beijing Road in Guangzhou. From the outset, there were problems, including delivery delays and difficulties filling certain key positions. The bigger problem was raising money for expansion which didn’t happen. Operating just the one unit, Finkelstein would acknowledge, wasn’t cost or time effective, so it closed two years later, on the Chinese New Year.
Finkelstein later became chairman and ceo of the former Cherry & Webb, a small women’s specialty chain that was based in South Attleboro, Mass. Finkelstein sold his stake in Cherry & Webb in 1999, left the business then, and a year later, it also went bankrupt.
Without question, Finkelstein demanded intense loyalty from his executives, though when asked about this years after he retired, he replied that wasn’t always the paramount criteria. “I was more concerned with talent,” he insisted. “Loyalty with few exceptions — either I got it or didn’t get it. Mostly what I looked for was whether people had the talent to do the job.”
“Ed was not afraid of strong personalities. He encouraged debate,” a former associate who requested anonymity once said. “He sought out creative energies of people with a wide array of backgrounds and interests. He often said, ‘I’m willing to live with the eccentricities of some people if they are loaded with talent and know how to move a business.’’
While open-minded with executives, Finkelstein was criticized for attempting to establish a family dynasty at the company. His son Daniel rose to chairman of the Macy’s West division, and another son, Mitchell, rose to head of Macy’s product development and sourcing office in Hong Kong. Both resigned not long after the company went bankrupt.
Another son, Robert, passed away after decades battling cystic fibrosis. A fiercely protective father, Finkelstein championed charitable efforts to fight the disease and help his son, often through in-store events.
“My father was an amazing man. He had a very special life filled with many accomplishments and successes, both professionally and personally,” said Daniel Finkelstein. “Dad had a unique ability to put life’s challenges in proper perspective. Family was always his number-one priority. He was a great husband, father, grandfather, and great grandfather, and we all knew how fortunate we were to have him in our lives.”
When the late Milton Petrie asked Finkelstein to be the inaugural speaker for the launch of the Milton Petrie School of Retailing at New York University, Finkelstein balked, saying he didn’t do such public engagements. Petrie asked a second time and Finkelstein still refused. Petrie persisted by asking Finkelstein what his favorite charity was. Finkelstein said the Cystic Fibrosis Foundation, and Petrie said he would donate $1 million to it. That’s how he got Finkelstein to make the inaugural speech. “There was nothing Ed would not do for his family,” said a former colleague.
Finkelstein started at Macy’s in 1949, after serving in the Navy in World War II and finishing Harvard Business School. He joined the Macy’s training squad in a program that lasted about seven months, much longer than these programs generally last today. It exposed him to several areas in the store, from receiving to selling.
“I was interested in retailing and the entertainment business,” and in those days, he recalled, Jewish men didn’t have much chance at developing careers in too many other industries, such as the automobile industry.
Having been born and raised in a New York suburb in Westchester County, Finkelstein was offered training jobs at Abraham & Straus and elsewhere, yet the Macy’s offer, at $25 more a month than the others, was a lot of money in those days. Macy’s was an easy choice.
After the training squad, Finkelstein became an assistant in the fabric department. He considered himself “a slow starter” which wasn’t far from the truth. He stayed in fabrics for eight years until getting his first promotion as a merchandise administrator of budget ready-to-wear. He considered that a liberating step up and an opportunity to further prove himself as he assumed broader merchandise responsibilities.
One of his earliest innovations was to split the moderate sportswear area into separate zones for active and regular sportswear, leading to a more profitable business. In the Sixties, he started the nation’s first petite department and convinced manufacturers that may have only been producing misses’ sizes to get into the business of petites.
He would also make wholesale changes to Macy’s selling floors. In 1974, Finkelstein cleared out a $10 million off-price business on the main level of Herald Square that sold everything on tables, from mink stoles to silverware, to make space for cosmetics lines. Clinique came in first and got the ball rolling. To re-create The Cellar in New York, he had to dismantle a $30 million budget business in the basement.
He was the first retailer to recognize the talent and relevance of fashion legend Liz Claiborne. When her business was just starting in the mid-Seventies, he insisted Claiborne get extra floor space and extra promotional attention. He felt she was clever, could exploit sportswear like no other designer, and understood what working women needed and what women wanted to wear in casual settings. Claiborne fit squarely into what Finkelstein felt Macy’s should represent — a store with a middle and upper-middle market appeal. “We never tried for the Saks [Fifth Avenue] or Neiman [Marcus] customer. But if you are selling moderate-price goods, the most important things were having [sales] information and presentation. When I was in Macy’s as a young person in ready-to-wear, we didn’t have computers. But I was kind of a bug on information, a real nut for it. I wanted information to make rational decisions.” He would get it from the vendors and people on the floor.
Finkelstein’s contributions as a top merchant had enormous impact on the business from the time he became a buyer to when he rose to president of Macy’s California in 1969, head of Macy’s New York in 1973 and, in 1980, chairman and ceo of the entire corporation.
In the Eighties, Finkelstein started developing private brands, such as INC, Charter Club and Alfani, that have endured. “A lot of the top merchants weren’t in favor of doing that,” Finkelstein once said. “I think they weren’t as bright as they should have been. In some cases, it became important enough that we had to say goodbye. There are risks in private brand. It took a while to learn how to do it correctly. I thought it was very important we have a certain percentage of business that distinguished us from other department stores, that gave us some separate meaning. When Allen Questrom [then chairman and ceo of Federated] got hold of Macy’s in 1994, he took me to lunch and was nice enough to say one of the very attractive things was the private brand program he was inheriting. We were the forerunners.”
Questrom said Monday that Finkelstein "made stores not only places where you buy merchandise but also places where concepts could be presented."
"That point of view made him a hugely transformative fellow. I didn't know him until later in life but I had watched what he was doing from afar. He was inspirational to a lot of people," Questrom said. "You can see all around the world today how department stores have reconceputalized based on things he started at Macy's."
Finkelstein also developed the Little Shops for high-end designers, which eventually shut down, and a lingerie world, and regarded Macy’s as a group of 12 to 15 specialty stores operations under one roof. He took the philosophy one step further by creating actual specialty stores called Aéropostale and Charter Club, at a time when Gap was on a roll and when specialty stores could grow fast and make money fast. There was also a third specialty chain that he launched selling lingerie because he felt vendors were too basic and that there was room to compete against Victoria’s Secret. None of his specialty businesses took off during his tenure, although Charter Club remains an important private brand for Macy’s and Aéropostale remains a public company.
Years later, well after he left the business, Finkelstein acknowledged that his flamboyant style, particularly the black-tie fund-raisers preceding Macy’s annual flower show wouldn’t play in today’s stringently cost-conscious business climate. “I would find it hard because of the creative things we used to do,” Finkelstein said in an interview after he retired.
Among those who most influenced him in his career were Herbert Seegal, whom he considered a brilliant merchandiser, and Pierre Bergé of Yves Saint Laurent, whom he befriended in Paris and from whom he learned about fashion, quality and style. Finkelstein would later insist that buyers traveling overseas visit museums and other points of interest, such as Capri, to see what was going on and develop fashion ideas. Finkelstein was an opera lover, and loved to play tennis though after retiring he tore his rotator cuff so he stopped playing.
The former Macy’s chairman read and reread Peter Drucker’s books on management and learned the value of time, and its finiteness, something that seems obvious though not always taken into account by managers when they divide their time between tasks. Finkelstein learned how to reallocate his time to different tasks and priorities each time he rose to a new job. Yet even when he reached the pinnacle of the West Coast and East Coast Macy’s organizations, he made time at the end of each day, on his way home, to visit salespeople on the selling floor.
“I would ask them what they were selling, if they needed anything,” he recalled in an interview. By showing interest, “They began to feel maybe their roles were important in our progress. The morale in both our downtown San Francisco and New York stores improved.”
In addition to sons Daniel and Mitchell, he is survived by his wife, Myra.