The Motley Fool readers have spoken, and I have heeded your cries. After months of pointing out CEO gaffes and faux pas, I've decided to make it a weekly tradition to also point out corporate leaders who are putting shareholder interests and that of the public first and are generally deserving of kudos from investors. For reference, here is last week's selection.
This week, we'll take a closer look at how Terry Lundgren, CEO of department store Macy's (NYSE: M ) , is bucking the high unemployment trend and putting America to work.
Kudos to you, Mr. Lundgren
If you haven't heard, or couldn't tell by that 200-plus-point tumultuous drop in the Dow Jones Industrial Average to begin June, job growth is slowing.
Global worries stemming from the European debt crisis and a slowing Chinese economy have many American businesses holstering their discretionary funds until their outlooks become clearer. In addition, the U.S. government is in the midst of a major budget cut that isn't giving it the ability to create jobs the way it once could. The unemployment rate rose to 8.2% last month and marked its 40th straight month over 8% -- and that doesn't even include participants still looking for a job who have fallen out of the unemployment statistics because of length of search time, nor does it include those who are underemployed. In short, things really aren't that rosy.
But don't tell that to Macy's CEO Terry Lundgren, because he'll have none of it.
Macy's has made it almost a tradition to annually hire college juniors, seniors, and graduates for its executive development program and summer internships nationwide. With the global economy showing signs of weakening in recent months, it wouldn't have surprised anyone had Macy's chosen to tone down its hiring this year. However, Macy's and Lundgren didn't do that. In fact, the company chose to hire 29% more college graduates juniors, seniors, and grads into its executive development program and internship opportunities over last year's totals.
Overall hires this year from America's colleges totaled 1,056 and will add to Macy's already impressive workforce of 171,000 (of which 22,000 are company executives). As Lundgren said in a company press release, "We pride ourselves on managing our business with passionate, well-rounded executives who are able to make decisions centered on customer needs and preferences."
He may call it a smart business move; I call it worthy of a pat on the back for getting America's college students to work. With youth unemployment in the U.S. sitting at 16.5%, twice the rate of overall unemployment, getting our young workers the skills they need to succeed early is vital to bringing the U.S. out of its stagnant growth phase.
A step above his peers
Aside from job creation, perhaps Lundgren's smartest move was uniting Macy's previously separate entities all under one brand name. It wasn't easy, but the simplicity of one name expanded Macy's reach and allowed it to gain significant share on its rivals. If anything, this shows the value of long-tenured management that understands the business.
The same can't be said for J.C. Penney (NYSE: JCP ) , which recently reached out to former Apple (Nasdaq: AAPL ) retail-store manager Ron Johnson to be its CEO. I'm not saying Johnson isn't the solution, because he was the cornerstone behind transforming Apple from just a computer company into a retail powerhouse with more than 300 retail stores when he left. In addition, Johnson was at least partly responsible in the 1990s for transforming Target (NYSE: TGT ) into a cool place to shop that would be price-competitive with Wal-Mart. But what I'm hinting at is that Penney's waited far too long to shake up its management team and lost a good amount of market share to Macy's in the process.
Similarly, Sears Holdings (Nasdaq: SHLD ) is dealing with a relatively new CEO, Louis D'Ambrosio, who's taking a no-nonsense approach to reducing expenses by closing up to 160 Sears and Kmart locations. Had Sears acted sooner, things could be different, but management waited for far too long and has lost some of its mall-based apparel market share to Macy's.
Two thumbs up
Owning a retailer like Macy's isn't going to be without its risks. Global fears and weather patterns aren't exactly the type of influences investors can control. However, having a strong leader like Lundgren should give investors some comfort that the business is headed in the right direction. Macy's provides that perfect in-between point of "inexpensive" and "luxury" and should continue to be a hot spot for consumers looking to spend their precious discretionary cash. I give you my sincere two thumbs up, Mr. Lundgren.
Do you have a CEO you'd like to nominate for this prestigious weekly honor? Shoot me an email and a one- or two-sentence description of why your choice deserves next week's nomination, and you just may see your nominee in the spotlight.
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