Crate & Barrel makes ex-CEO Diemoz's exit official weeks after his departure

Dive Brief:

Crate & Barrel on Monday officially announced former CEO Doug Diemoz's departure from the company, according to a company press release; earlier this month the home goods and furnishings retailer had announced that board chair Neela Montgomery will become the new CEO on Aug. 1.
In mid-April, the Chicago Tribune obtained an internal company memo stating that Diemoz had stepped down from his position. At the time, a spokesperson acknowledged his departure but declined to provide further details regarding the news.
Diemoz, who had arrived from Restoration Hardware in 2015, is at the center of a lawsuit filed earlier this year in which Restoration Hardware alleged that he and another former employee committed trade secret misappropriation and contract violations to benefit Crate and Barrel.

Dive Insight:

Crate & Barrel's executive suite has been in turmoil since the 2012 retirement of longtime CEO Barbara Turf, who was known for leading the company with creativity and flair. After her death in 2014, the company was without its rudder. Adding to the chaos, CEO Sascha Bopp and President Marta Calle abruptly departed later that year, just two years after their appointments.

Diemoz was hired to give Crate & Barrel — which boasts a solid reputation for affordable, European-style home goods and furniture — a new direction. Diemoz left his position as chief development officer at Restoration Hardware to become Crate & Barrel CEO in August 2015. He then recruited Kimberly Ahlheim to join his team last year.

The suit filed by Restoration Hardware in early 2017 alleges that Diemoz and Ahlheim brought with them proprietary knowledge of the company's food and beverage operations, part of an experiment in Chicago to boost Restoration Hardware’s retail experience.

While surely a selling point for Crate & Barrel, the expertise and insight that Diemoz gained at Restoration Hardware was taken too far, according to the lawsuit. "Crate was keenly aware of the high growth that RH has achieved due to its more innovative approach to the home furnishings industry. Lacking its own formula for growth, Crate set upon a business strategy of recruiting away key senior leaders … to help revitalize Crate’s flagging business," the lawsuit reads in part. "In particular, Crate launched a systematic strategy to recruit a new CEO in 2014 by targeting a list of senior management talent from RH. Rather than invent its own growth strategy, Crate effectively sought to steal a page from the successful RH playbook."

Beyond touting its own success, Restoration Hardware threw quite a bit of shade at its competitor in the suit: "In contrast to RH’s meteoric revenue growth since the Great Recession, competitor Crate ... has experienced little revenue growth during this same time period. Some public reports state that privately held Crate’s revenue in 2007 was $1.3 billion, and its revenue in 2013 was $1.38 billion, showing a long period of slow to no growth in revenue. ... Crate began targeting RH personnel and RH strategies as part of a strategy to turn around Crate’s inferior performance and growth."

Restoration Hardware is especially focused on its food operations, an effort led by Ahlheim during her time there. The retailer alleges that she was giving over secrets to her soon-to-be new employer while she was still at Restoration Hardware.

The legal tussle between the companies comes as retailers of all stripes are increasingly turning to food concessions to attract customers and provide an enjoyable experience that incentivizes them to linger at their stores. Target, Barnes & Noble, Kohl’s and Urban Outfitters have all tested various iterations of food concepts, from delis to upscale restaurants, to spice things up amid declining foot traffic.

In his statement Monday, Diemoz thanked the company for "their unwavering commitment to our turnaround success." With the appointment last month of company insider Montgomery to the role, the Chicago-based retailer will avoid the surprises that have emerged as it brought in outsiders to the helm. She has been instrumental in moving Crate & Barrel forward for years, though she’s been working from Germany.

“The Crate and Barrel family of brands has seen a strong turnaround in the past two years and I firmly believe the best is yet to come," she said in a statement on Monday. "Our vision of delivering great design for inspired living and providing best in class service to each and every customer remains strong.”