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For Hire: Retail CFOs

The job description has changed dramatically, along with shopper habits.
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What do retailers want for Christmas? Apparently, new Chief Financial Officers. 

Neiman Marcus Group Inc. is on the hunt for a new CFO. So are Kohl's Corp., Coach Inc. and Nordstrom Inc. Whole Foods Market Inc.'s CFO of 29 years -- and the longest-serving female CFO in the Fortune 500 -- will be leaving next year.

In fact, the finance chiefs of at least 45 retail companies worldwide have exited in the past year, according to a Bloomberg tally. About one-fifth of U.S. retailers appointed new finance chiefs in 2015, compared to 15 percent for all industries, according to search firm Korn/Ferry International. 1

In 2016, the CFO turnover rate for retailers was 17.4 percent percent, compared to 15.4 percent for all industries, Korn/Ferry said.

This rapid turnover is a symptom of the rapidly changing retail industry, as shifting consumer behavior demands new strategies from companies trying to keep up. 

Turn It Up

CFO turnover rates at retailers have outpaced all industries in the last two years

Source: Korn/Ferry International

Annual average turnover is based on the top 1,000 U.S.-based companies by revenue

As a result, the job description of a retail CFO has changed. More than two decades ago -- when the departing CFOs of Whole Foods and Nordstrom first joined their companies -- a retail CFO's job focused mostly on growth. The formula was straightforward: Make a splashy announcement about building new stores and watch the stock price rise. New locations boost sales, and the stock rises more. Repeat. 

Inventory management and making the numbers work for M&A were also part of the job, and they remain important today. But retail's top priorities look different now.

Retailers are shifting spending away from stores and into technology and e-commerce operations, to better compete with Amazon and satisfy customers who increasingly prefer shopping online. Other useful skills for a retail CFO these days include closing stores, executing turnaround plans, and slimming down corporate structures.

Skills that aren't traditionally part of the CFO toolkit -- such as coming up with big-picture strategy, operating stores and websites, and parsing customer data -- are also becoming more important, according to Bryan Proctor, who leads Korn/Ferry's financial officer practice. 

Top Turnover

Retailers in the S&P Select Retail Index with the most CFOs since 2005

Source: Bloomberg

To fill CFO jobs, retailers are also increasingly looking for candidates outside of retail. Tiffany & Co.'s new finance chief Mark Erceg came from a railroad company. Ralph Lauren Corp.'s new CFO Jane Nielsen spent 15 years at PepsiCo Inc. before joining Coach as CFO in 2011 to help fashion a comeback. She left Coach over in September to join rival Ralph Lauren, which is undergoing its own turnaround. 

Coach and Ralph Lauren are among a host of retailers which, realizing the limits of building new stores, are now trying to shrink in order to grow. Coach has closed 100 stores and is relying less on promotional outlets in an effort to regain its luxury status. After an initial sales hit, Coach's revenue is recovering, and operating margins are widening.

Carol Tomé, CFO of The Home Depot Inc., has bucked the turnover trend, working under every CEO since joining the chain in 1995. But her job description has changed, along with the retailer's focus, in that time. Home Depot dramatically slowed store openings after 2007 when it realized it had more than enough stores and didn't want to rely on the "retail drug of square-footage growth," Tomé said in an interview.

The slowdown, along with shedding unprofitable businesses, cost Home Depot $13 billion in sales initially. It has since recovered those sales and more -- without much square-footage growth. Instead it has spent more on its supply chain, technology, and e-commerce operations. This focus on profitable growth helped fuel dividends and share repurchases.

Along the way, Tomé picked up the additional title of Vice President of Corporate Services, essentially leading strategy and business development, reflecting how the CFO office has evolved beyond number-crunching.

Sticking Around

Average CFO tenures are longer in retail than in most other sectors, but turnover has been high lately

Source: Korn/Ferry International

Note: Average CFO tenures of the top 1,000 U.S. companies by revenue

Other finance chiefs looking to stick around a while would be wise to follow suit. As retailers grapple with a seismic shift in the way people spend money, they will rely even more on their CFOs to lead them to profitable growth despite dwindling traffic. Just do the math.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
  1. Among the 1,000 largest U.S. companies by revenue

To contact the author of this story:
Shelly Banjo in New York at

To contact the editor responsible for this story:
Mark Gongloff at

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