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May Dept. Stores CEO quits

May Department Stores Co. on Friday said its chairman and chief executive officer has resigned.
/ Source: Reuters

May Department Stores Co. Friday said Gene Kahn, its chairman and chief executive officer, has resigned, a step analysts say would help bring in new blood to revive the retailer's sales.

The St. Louis-based company said it would immediately begin searching for a successor, within and outside its ranks, triggering a 4 percent jump in share price.

Its brief statement did not say why Kahn was leaving, but said John Dunham would become acting chairman and CEO, in addition to his current role as president.

Asked to explain why Kahn left, company spokeswoman Sharon Bateman said: "We have no comment. His resignation has been accepted by the board and is effective today."

David Griffith, an analyst at Tradition Asiel Securities Inc. said "hope that change at the top could drive some better performance for the company as a whole" probably drove May's stock higher following the announcement of Kahn's departure.

"I'm surprised, but certainly they have underperformed relative to Federated, both in terms of their stock and their sales performance," he said.

May faces escalating competition from top rival Federated Department Stores Inc. and other chains, including discount retailers such as Wal-Mart Stores Inc. .

Griffith has a "hold" rating on the May stock and does not own it.

Kahn became president and CEO in 1998 and three years later he took on the title of chairman. One of his last major assignments would have been to face Wall Street when the company reports its fourth-quarter results on Feb. 10.

His departure comes just seven months after he helped lead a $3.24 billion acquisition of Marshall Field's department store group and some Mervyn store locations from discount retailer Target Corp. .

That deal was slammed by some analysts who thought it carried a very high price tag. May is the parent of such stores as Lord & Taylor and David's Bridal.

Even with the acquisition, it has posted poor sales results for more than three years. Its most recent December sales results show that sales at stores open at least a year, or same-store sales, slid 3.5 percent in the month, compared with a gain of 2.3 percent at rival Federated.

"May need's a strong injection of new blood," said Kurt Barnard, president of consultants Retail Forecasting Group.