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THE ANCHOR MAN

DEPARTMENT STORE VETERAN VINCENT CORNO HAS JOINED THE REAL ESTATE TEAM AT SAKS

By Joel Groover

Given the blistering pace of change in the retail world, the $17 billion merger between Federated Department Stores and The May Co. might seem like ancient history. But Vincent A. Corno, the new senior vice president of real estate at Saks, would have no trouble passing a pop quiz about that historic deal. “February 28, 2005,” he said. “I will never forget it.”

To be sure, the merger forever changed the U.S. department store sector and shook up mall real estate across the country. It was also personally momentous for Corno, who had spent 15 years in his hometown of St. Louis, in a succession of increasingly important real estate positions at May. These included, most recently, senior vice president of May Realty, where he oversaw 130 department stores that posted a total of $5 billion in sales annually. The merger brought him to something of a crossroads in his career, Corno says. He could stay on at the new entity in a senior real estate position at the Cincinnati headquarters of Federated (now Marcy's Inc.), or he could leave the department store world altogether and go off in search of new real estate challenges.

“Dealing with developers on a day-to-day basis, I had made a lot of relationships in the business,” Corno said. “So when the announcement came, I was pleased and very fortunate to have some options. I decided to part ways [with Federated] and try something different.”

Relocating for the first time, Corno signed on as vice president of development at Cleveland-based Forest City Enterprises. Jumping from a 100-year-old department store chain to a highly diverse, $10 billion, mixed-used development company was indeed something different. But Corno clearly relishes a challenge — he holds both a CPA certificate and a law degree. Working closely with Emerick J. Corsi, Forest City's executive vice president of development, he was point man for the signing/expanding of department store tenants, particularly Marcy's and Dullard's, when Saks approached him late last summer. The chance to head real estate operations for this venerable name was too good to refuse, Corno says. He took charge of Saks' real estate operations in February.

“After two years at Forest City, I was perfectly content there,” he said. “But there are basically 10 [senior vice president of] real estate positions in the country for department store operators, and if you go down the list, most of the others are well occupied. With my experience on the department store side, and a rounding out of that with experience on the development side, this opportunity was one I felt I was ideally suited for. It came along faster than I ever expected.”

Corno started his career as a public accountant at Price Waterhouse (now PricewaterhouseCoopers) after earning his undergraduate degree from Saint Louis University in 1985. Among his clients was the Ralston Purina Co., for which he went to work in 1987. The job gave him the opportunity to travel in Europe and Africa while doing audits and compliance tests for Ralston Purina's Eveready Battery Co. subsidiary. Corno began working toward his law degree through night classes at Saint Louis University in 1988, and left Ralston Purina the following year to attend school fulltime. He joined May Co.'s large and well-regarded legal department in December 1991. “One of the things that intrigued me was, May Company had a very sophisticated legal practice,” Corno said. “It was basically an in-house, dedicated law firm with over 40 attorneys.”

May Co. also had an established path for lawyers to move from legal to development. Five years into his career at May, Corno did just that. Over the next 15 years, his responsibilities grew — from acquiring office space in New York City or signing mom-and-pops into parking garage frontage, to handling real estate operations for the likes of Marshall Field's and Robinsons-May.

In his new role at New York City-based Saks, the 45-year-old oversees real estate matters for Saks Fifth Avenue and its Off 5th outlet offshoot, including new store development and expansion and remodeling projects.

Corno's arrival follows a series of smart real estate decisions by Saks that, given the lackluster performance of midtier department stores in recent years, have all but saved the company, says Howard Davidowitz, chairman of Davidowitz & Associates, a New York City-based retail consulting and investment banking firm. Seeking to streamline its operations, Saks sold the Proffitt's and McRae's divisions to Belk in July 2005, and the Northern Department Store Group (which included Bergner's, Boston Store, Carson Pirie Scott, Herberger's and Younkers) to The Bon-Ton Stores the following year. With the sale of Parisian to Belk in October 2006, the combined value of Saks' department store divestitures was about $2 billion.

With these moves, the company did much more than mollify shareholders and pay down debt, says Davidowitz. Saks had always been synonymous with luxury but lost touch with its core customer over the years, he says. “Not only had they bought midmarket department stores, but they had actually gone through a period where they were selling a lot of midmarket brands like Liz Claiborne at Saks,” Davidowitz said. “It was ridiculous. Now they've got a better focus on a more upscale and, most importantly, younger customer. Those are huge changes.”

The relative strength of Saks' market focus — comparable-store sales rose 11.7 percent last year — was not lost on Corno as he weighed taking the job. “The comp-store sales over the last 18 months have been industry-leading, and 2007 was a banner year for Saks,” Corno said. “Saks has a luxury business that has been extremely successful. But interesting to me is the Off 5th program, which is on the other end of the price point spectrum and also has seen tremendous success. The pressures right now are on the moderate department stores, the guys in the middle.”

At least initially, much of Corno's focus will be on overseeing expansions and renovations of existing stores rather than building new ones. “We don't have any new stores per se that have been announced, but that does not preclude us from necessarily considering the right opportunities,” he said. “There are certain markets where we think Saks can make sense. Part of my role will be to get out there and develop those opportunities and make recommendations to management.”

The focus within existing Saks stores, already filled with the likes of Burberry, David Yurman, Dolce & Gabbana, Gucci, Jimmy Choo and Prada, will continue to be on merchandise-focused expansions and renovations, says Julia Bentley, Saks' senior vice president of investor relations and communications. The goal is to give core customers the luxury brands and sumptuous store environments they crave, she says. “In Beverly Hills and Phoenix, for example, we redid the entire accessories, shoes and handbags areas and expanded the assortments of some of those key brands,” said Bentley. “That is consistent with what we are doing chainwide. We added about 90 vendor shops nationwide in 2007 and plan to add over 100 in 2008. That is where we're putting our dollars.”

Along with the sheer mystique of Saks, with its chic New York City flagship, this focus on real estate is a big part of why the job proved so irresistible, Corno said. And then there is the corporate climate that Stephen I. Sadove, chairman and CEO, and Ronald L. Frasch, president and chief merchandising officer, have created. “The company has shown quite a dramatic turnaround,” Corno said. “There is a winning culture here, and that was apparent to me as I went through the interviewing process. It is a cool place to be.”

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