Portfolio.com takes you onto the runways and behind the shows for New York’s Fashion Week. Get updates during the week from Lauren Goldstein Crowe’s blog, find out what it takes to be a fashion director for a major retailer, and see what DKNY is doing to get attention.

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Everyone wants Allen Questrom's advice these days.

Leveraged-buyout veteran Thomas H. Lee recently lured him into the private equity fold as a senior adviser after Questrom retired as C.E.O. of J.C. Penney in 2004. Questrom's expertise immediately came to hand, as he helped Lee's new fund orchestrate a $395 million takeover of national retailer Deb Shops last summer.

As he was closing that deal, Wal-Mart named Questrom to its board after suffering big losses in its apparel division. Now, new rumors have him sitting atop a shortlist of candidates to take over the ailing Sears Holdings after hedge fund financier Eddie Lampert announced he would be relinquishing operational control.

Considering Questrom’s 40-year career, the attention is understandable. The veteran C.E.O. has saved more companies than most executives have managed. As chief executive, he reversed the fortune of Neiman Marcus by revamping its customer service. He left Neiman in 1990 to head up Federated Department Stores, where he earned the moniker "turnaround artist" by taking the company out of chapter 11 bankruptcy proceedings. Questrom followed that up from 1999-2000 running Barneys New York, where he instituted an expansion into the contemporary category, a fashion area it now dominates (the retailer was bought by Dubai investment arm Istithmar for $942 million last August).

Questrom, 67, recently spoke to Portfolio.com by phone from his Aspen home, where he reflected on needed changes in the retail landscape, the mass-class phenomenon, and New York Fashion Week.


Portfolio.com: Given the recent economic outlook and the disquieting chatter about recession, what does that mean for the retail sector?
 
Questrom: The retail business has already slowed down, directly in relationship to the overall feeling of the economy. That’s the obvious thing. Everyone’s talking about the subprime, but the subprime is only a small part of the issue. The real issue is people seeing the value of their overall home market drop—precipitously. Five years before all this, the value of their homes was going in a positive direction, extremely positive, and they took out a lot of money in financing and put that money into the marketplace, whether that was in buying a new car or buying apparel or renovating their house. With that benefit the economy had with the inflation of homes, you now have a double reverse, because people are not only taking money out of the market, now their house is worth less, and that’s a real psychological negative.
 
Portfolio.com: Is the U.S. economy in a recession?
 
Questrom: I’m not an economist, so I don’t want to say. But there’s a general malaise in the marketplace, and that’s going to play out over the next several quarters.
 
Portfolio.com: How does that affect a retailer like Wal-Mart?
 
Questrom: Wal-Mart benefits dramatically in a couple ways. One, there is nobody who has lower cost-of-operation, so if, as a customer, I’m pressed in terms of my own spending ability, I’m going to Wal-Mart. In addition to that, Wal-Mart has a very big presence in the food industry, and that part of the economy has gone up. Food prices have gone up I would say probably in the range of 4 to 6 percent, and Wal-Mart is enjoying big increases. When you’re looking at retailing and other retailers, most people think of Wal-Mart in terms of Target and Sears, but they usually don’t put Wal-Mart in the supermarket category. Wal-Mart has the biggest piece of the supermarket business, and all supermarkets have done quite well and are still doing quite well.