NEW YORK -- Woodward & Lothrop, the department store chain that has been a Washington, D.C., institution for 113 years, is reportedly on the brink of bankruptcy.
Trade sources said Wednesday the retailer has lined up $100 million in Chapter 11 financing from CIT Group after funding was cut off from W&L's parent, Taubman Holdings Co., which is controlled by A. Alfred Taubman. Taubman also owns Sotheby's and sits on the R.H. Macy board.
Calls to Taubman were referred to W&L, where a spokeswoman flatly denied the reports of an impending Chapter 11 and the financing and said she knew nothing about Taubman pulling the plug.
Taubman, who has repeatedly bailed out the troubled chain, is not expected to make a $50 million injection of capital that had been scheduled for this Saturday. He has reportedly stopped financing the retailer after having funded over $100 million in losses in the past three years alone. Sources said the chain lost $42.2 million in the first half of 1993, against a $30 million deficit in the comparable period a year earlier. Sales in the half rose to $366.9 million from $364 million.
In 1992, W&L lost $39.5 million on sales of $855 million; a year earlier, it lost $43.5 million on sales of $838 million.
The company operates 35 department stores: 19 Woodward & Lothrop units and 16 John Wanamaker locations.
W&L was acquired by Taubman in a $218 million leveraged buyout in 1984. Two years later, the chain acquired Wanamaker's from Carter Hawley Hale Stores for $180 million.
"That's probably the straw that broke the camel's back, as far as taking on too much debt," said a credit source.
In 1988, Taubman Investment Co. said it wanted to sell the beleaguered company, but it was unsuccessful and subsequently took it off the market.
W&L is currently in the midst of the annual cleanup period of its $135 million bank line from Chemical Bank, in which the chain has to pay off all its bank borrowings. During this period -- Jan. 1-15 -- it is not able to draw any new bank funds.
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