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What the CFO Needs to Know

BY CSA STAFF

As the key cog in the wheel of a retail chain’s financial structure, today’s retail CFOs find themselves caught in the crosshairs of senior management and stakeholders demanding maximum profit and measurable growth amid increased consolidation and tightened revenues.

But that’s nothing new. Financial chiefs have always had to balance profit and loss with expansion strategies. What has changed is that a whole host of added responsibilities has now entered the mix.

In fact, according to Alison Paul, vice chairman, Deloitte LLP and retail and distribution leader, today’s CFOs are expected to play four diverse and challenging roles — operators, stewards, strategists and catalysts — of which the latter two are new.

“As strategists, CFOs are shaping the overall direction of a retailer’s business, working directly with the CEO, Paul said. “They are vital in providing financial leadership and aligning business and finance strategy to grow the business. CFOs also are becoming catalysts and taking on an additional responsibility of instilling a financial approach and mind-set throughout the organization to help other parts of the business perform better. These varied roles make a CFO’s job more complex than ever.”

Going forward, the CFO’s involvement in defining and executing an overall strategy will continue to increase, according to Paul.

“They will also continue to change organizational behavior by partnering with other executives and senior management to achieve their financial and strategic objectives,” she added. (For more with Alison Paul on the expanding role of the CFO, see chainstoreage.com.)

In light of the expanding role of financial chiefs, CSA editors spoke with retailers and industry experts/consul-tants to identify insights and trends to help broaden a CFO’s understanding in six key areas: construction, data security, cloud computing, facilities management, sustainability/energy management and real estate. CSA also spoke with Massage Envy Spa CFO Greg Esgar about his expanding role in the fast-growing chain.

As the key cog in the wheel of a retail chain’s financial structure, today’s retail CFOs find themselves caught in the crosshairs of senior management and stakeholders demanding maximum profit and measurable growth amid increased consolidation and tightened revenues.

But that’s nothing new. Financial chiefs have always had to balance profit and loss with expansion strategies. What has changed is that a whole host of added responsibilities has now entered the mix.

In fact, according to Alison Paul, vice chairman, Deloitte LLP and retail and distribution leader, today’s CFOs are expected to play four diverse and challenging roles — operators, stewards, strategists and catalysts — of which the latter two are new.


Related stories:

What the CFO Needs to Know: Bird’s Eye View

What the CFO Needs to Know: Energy & Sustainability

What the CFO Needs to Know: Real Estate

What the CFO Needs to Know: Facilities Management

What the CFO Needs to Know: Cloud Computing

What the CFO Needs to Know: Data Breaches

What the CFO Needs to Know: Construction

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Summer Buzz

BY Marianne Wilson

Unlike most consumers, the retail industry doesn’t take a holiday in the summer. As we head into July, three very different retail companies are very much in the news. One has the industry all abuzz over who will be its next chief, while another has launched a pioneering employee initiative. And the newly appointed chief of the third wants to turn a cult L.A. brand into a global powerhouse. I’m fascinated by all three:

• Target: At press time, there is no clear front-runner to replace ousted CEO Gregg Steinhafel. Industry analysts keep adding candidates to the list of would-be successors, with the most recent being Sam’s Club CEO Rosalind Brewer.

Other names being floated as possible fits include HSN’s Mindy Grossman, Victoria’s Secret’s Sharen Turney, Foot Locker’s Ken Hicks, Tractor Supply’s Co.’s Greg Sandfort, Ralph Lauren’s Roger Farah and Gap Inc.’s Glenn Murphy — and that’s just a small sampling.

Target isn’t the only big retailer shopping for a new chief. J.C. Penney, American Eagle Outfitters, American Apparel and bebe stores are all being led by interim CEOs. And The Bon-Ton Stores’ Brendan Hoffman steps down in early 2015.

• Starbucks: It didn’t take long for the knives to come out over Starbucks’ new program to pay its employees college tuition. There was criticism that students face potentially long waits for reimbursements. And some don’t like that the program requires students to get their education online (from Arizona State University).

I get it: The program isn’t perfect. But give credit where it’s due. The Starbucks initiative is unique in its size and scope. It’s open to part- and full-timers, and comes with no strings attached. Employees are free to choose any course of study, and they don’t have to stay with the company for a required amount of time after earning a degree.

In a low-wage service industry, Starbucks has been a trailblazer, providing health insurance, even to part-timers, and giving its employees stock options. Who knows whether the coffee giant has been so successful because of the perks or in spite of them? I’d like to think it’s the former.

• Fred Segal: Can Fred Segal, the legendary Los Angeles retailer and epitome of California cool, transform itself into a global luxury retail brand? That’s the game plan of Sandow, which acquired Fred Segal in 2012.

Sandow has assembled a diverse team for Fred Segal that includes veteran retailer Paul Blum (late of Juicy Couture) as CEO and equity investor Evolution Media Partners (a joint venture that includes Hollywood powerhouse Creative Artists Agency). The goal: to reinvent the luxury shopping experience under the Fred Segal brand by building lifestyle stores that combine fashion, dining, entertainment, cultural events and wellness programs. Digital- and mobile-friendly, the stores will offer an immersive, engaging experience, with unique merchandise.

“We’re not going to retrofit our stores to make them experiential retail. We’re integrating that from the beginning,” said Blum at a press event.

Blum is looking at both street and mall locations; each store will be individually designed. There is no word yet on when the new format will make its debut. Personally, I can’t wait.

Marianne Wilson

[email protected]

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Oracle acquires Micros

BY Dan Berthiaume

Redwood Shores, Calif. – Oracle Corp. has acquired Micros Systems, a provider of integrated retail and hospitality enterprise solutions, for $5.3 billion. This figure is 27-times Micros’ current earnings.

Micros offers on-premise and hosted cloud implementations of front- and back-office applications. Retail solutions include POS, e-commerce, CRM, merchandise planning and loss prevention.

On the retail side, this purchase provides Oracle with a leading position in the POS marketplace. Micros is also a leading provider of mobile POS solutions for the specialty retail and table service restaurant verticals. Other areas where Micros offers Oracle built-in strength include loss prevention and hosted business intelligence.

Micros’ management and employees will form a dedicated business within Oracle, and until the transaction closes, Oracle and Micros will continue to operate independently and it is business as usual. The board of directors of Micros has unanimously approved the transaction. The transaction is expected to close in the second half of 2014, subject to customary terms and conditions.

“We expect this transaction to be immediately accretive to Oracle’s earnings on a non‐GAAP basis and to expand over time,” said Oracle president and CFO Safra Catz.

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