May Department Stores (St. Louis) confirmed rumors that it was about to purchase nine departmentstore locations from Saks Inc. (Birmingham, Ala.). The purchase, involving approximately $237 million for the stores and $72 million for merchandise inventories and customer accounts receivable, is expected to close on or before March 16, 2001.
The nine locations include five Proffitt's stores in Nashville; three Parisian stores (Baton Rouge, La., Lafayette, La., and Orlando); and a McRae's store in Baton Rouge.
May's Hecht's division (based in Washington, D.C.) will operate the Nashville stores – at Galleria at Cool Springs, The Mall at Green Hills, Bellevue Center, Hickory Hollow and Rivergate Mall – the division's first foray into Tennessee. With these new stores, the Hecht's chain will grow to 79 stores in seven states and the District of Columbia. The Houston-based Foley's division will operate the three Louisiana stores – at Cortana Mall and Mall of Louisiana (Baton Rouge) and Acadiana Mall (Lafayette) – representing Foley's debut in those markets. That chain is now 63 stores in five states. The former Orlando Parisian store at The Florida Mall will become a Lord & Taylor store. That New York-based chain will have grown to 82 stores – including nine in Florida-with this new location and new store-openings this fall in Tampa and West Palm Beach. (The chain's Boca Raton, Fla., store will also undergo expansion and renovation this year.)
Following completion of the purchase, the eight stores in Tennessee and Louisiana will close for approximately 10 days while May installs data systems and trains associates. Saks will close the Orlando store, after which May will expand, remodel and reopen the store in early 2002.
May's aggressive expansion plans include the opening of 13 new department stores this year. In 2000, it opened 23 new stores: four Lord & Taylor stores, four Foley's stores, one Kaufmann's store, one Famous-Barr store and 13 ZCMI stores. The company currently operates 429 department stores under its various nameplates, plus 123 David's Bridal.
Saks, Inc., which grew from eight regional Proffitt's stores in Tennessee to the fourth-largest department store organization in the country (with more than 360 stores) at the time it purchased Saks Fifth Avenue in 1998 (when it renamed itself Saks Inc. by taking on the prestigious label of its highest-profile acquisition) has been in a steady retrenchment mode recently. It has already put in place the plans to spin off the Saks Fifth Avenue operation by early summer. Earlier this month, Moody's Investor Services downgraded the company's rating to below investment grade, the equivalent of a junk bond rating.