By  on September 19, 1994

WASHINGTON -- Woodward & Lothrop Inc. is projecting a 2.6 percent compound annual growth rate for the next five years, according to a business plan presented to creditors last week.

The plan also projects a 6 percentage point drop in operating expenses over the same period for the department-store chain.

"This plan is based on some very prudent financial projections," chief executive officer Robert B. Mang told creditors, according to a summary of the meeting released Thursday.

"What we have here is an extremely viable plan that is based on a conservative sales forecast and significant improvements in productivity and expense control," Mang said.

W&L filed for Chapter 11 bankruptcy protection in January and plans to emerge next spring.

The company, based here, runs 16 stores. Its subsidiary, John Wanamaker Inc., operates 15 department stores in the Philadelphia area.

Marc Beilinson, a Los Angeles lawyer who specializes in bankruptcy cases, said the company's projected growth rate is in line with other retailers that have recently emerged from bankruptcy protection.

He also applauded the company's plan to become more efficient by improving its inventory control and management information systems, which Mang said already have boosted productivity.

"Often, pre-Chapter 11, retailers are carrying huge levels of inventory that wouldn't be necessary if they knew what the customers were purchasing," Beilinson said. "With no inventory controls, they don't know what's obsolete."

According to the summary, the company expects to double its current margins on earnings before interest, taxes, depreciation and amortization -- and revamp its store operations, marketing and merchandising in coming months. The retailer did not reveal current margins.

W&L anticipates sales associates' productivity will increase by 20 percent, a level that Beilinson deemed "almost impossible unless the level of productivity was at a ridiculously low level before."

In addition, the retailer intends to close two of its four distribution facilities and open four new home-furnishings stores in the next five years. The company opened its first home-furnishings unit in 1991 and now has four.

As for the company's cost-cutting plans, Beilinson said, "cost controls are something bankruptcy cases force executive officers to do as a matter of routine, and they typically are much leaner and more cost efficient once the case has been completed.

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