NEW YORK — Now that Saks Inc. is done selling its southern department store business, it’s shopping around its chain of northern-based stores.
R. Brad Martin, chairman and chief executive officer of Saks Inc., gave a good pitch for the sale of that business. “It’s a business that’s quite profitable,” Martin told WWD. “The stores are either number one or number two in their marketplaces. In the Chicago, Milwaukee, Des Moines and Omaha markets, we’re the number-one [retail department store] business, and we are a terrific emerging business in Michigan. We are the number-two business in metro Chicago,” next to Marshall Field’s.
Buyers of the northern group, Martin explained, would have further opportunities to strengthen market share as Federated Department Stores sells off stores in certain markets due to its acquisition of May Department Stores Co.
On Friday, Saks Inc. said it was selling its Proffitt’s and McRae’s businesses to Belk Inc. for $622 million in cash, plus the assumption of $1 million in capitalized lease obligations and certain other liabilities. The announcement Friday confirmed a second report in WWD two weeks ago that said a deal for the two nameplates was imminent.
In a statement, Saks said it was exploring “strategic alternatives” for its northern department store division as one entity and Club Libby Lu, which could include a sale of one or both. The retailer said it will continue to operate its 38-unit Parisian chain as well as its Saks Fifth Avenue division. The northern department store division includes Carson Pirie Scott, Bergner’s, Younker’s and Herberger’s.
The Saks deal with Belk for the 22 Proffitt’s stores and the 25-unit McRae’s, which is subject to the expiration of waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act, is expected to close on July 5. The 47 Proffitt’s/McRae’s stores being sold to Belk, located throughout 11 southeastern states, generated $700 million in revenue in 2004.
In a statement Friday, Martin said, “The decisions to sell Proffitt’s and McRae’s, to explore strategic alternatives for our northern department store group and Club Libby Lu and to continue to operate Parisian were made very deliberately. We believe this strategy is in the long-term best interests of our shareholders, our customers and our associates.”
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