Last month, New York-based Cerberus hired former JC Penney executive Vanessa Castagna to run portfolio company Mervyn’s, a discount retail chain. It’s a smart move, according to industry watchers, because, unlike other sectors that have seen heavy private equity investment, the retail sector requires an extra special touch.
By all accounts, there are more large-scale retail transactions in the in the pipeline. Private equity deals involving Toys ‘R Us, ShopKo and Brookstone have all been inked and retailers Saks, JC Penney and Nieman Marcus are all reportedly on the block. As these transactions become portfolio investments, the right management team could make all the difference.
A retail veteran at the executive level, Castagna has plenty of experience across a number of high-profile chains, including Target, Marshall’s and Lazarus, a store under the Federated banner.
Most recently, Castagna was at the helm of a high-profile turnaround when working with Questrom at JC Penney, where she was the chairman and chief executive officer for stores, catalogue and Internet. She was able to successfully revamp the struggling company’s business plan to increase consistency and efficiency. In fact, Castagna’s position at Cerberus fuelled rumours that the hedge fund was going to make a bid for the retailer, something JC Penney management has denied.
Before JC Penney, Castagna worked at Wal-Mart, where she became the senior vice president and general merchandising manager for women’s apparel in 1996. She was able to lift the sluggish sales of the retail giant’s clothing department, which was seen as less fashionable than competitors like the Target chain.
This track record made Castagna a popular target for recruitment. Cerberus, who worked with Sun Capital Partners and Lubert-Adler/Klaff Partners on the $1.2 billion Mervyn’s deal, faced some competition going after Castagna. Chains Sears, Roebuck and Kohl’s were reportedly tried to recruit the executive, who left her post at JC Penney after she was passed over for the top spot when Questrom left.
Cerberus continues to build upon its fashion and retail portfolio, investing in sportswear company Fila, female fashion label Esprit, textile maker Guilford Mills and lingerie firm Frederick’s of Hollywood.
“I will also be available for other Cerberus investment opportunities,” Castagna told Women’s Wear Daily in March.