Byline: Michael Marlow

LOS ANGELES--For the first time since he bought Broadway Stores Inc. three years ago, chairman Samuel Zell said Friday he would not rule out selling off more Broadway stores, including the Northern and Southern California divisions.
During the annual meeting here Friday, Zell told stockholders he has received one offer for the 12-unit Southwest division and several offers for certain stores in the division, but he declined to reveal specifics about the offers. The store announced in April that it was putting the Southwest division up for sale.
Zell did not discuss possible sales of other stores during the meeting, but during an interview with WWD immediately afterward, he left open the possibility that other parts of the chain could be sold.
For several weeks, rumors have circulated in local real estate camps that May Department Stores Co. is about to make a bid for Broadway's Northern California division. Under that scenario, Southern California would be the remaining division up for grabs, with Dillard's mentioned as the most likely bidder.
"I've heard all the same stories," Zell said during the interview. "They've made me no offer."
Asked whether he would sell other or all stores to recoup part of his investment, Zell said he is considering all options.
"The answer is somebody may come in tomorrow morning and say we'll give you 'x' or 'y' and we'd have to respond," Zell said. "But I have no knowledge of anybody coming at us and wanting Northern California or Southern or whatever."
Zell's statements were in sharp contrast to recent public comments from David Dworkin, Broadway's president and chief executive officer. Since the possible sale of the Southwest division was announced, Dworkin has consistently maintained that the company was not interested in selling stores other than the Southwest division. He once called the speculation of a total Broadway breakup "the most absurd I've ever heard."
Zell's comments come as more analysts are questioning Broadway's long-term chances.
Broadway filed for Chapter 11 protection in February 1991 and emerged from the proceedings in October 1992.
But the chain continues to be plagued by weak sales, heavy debt and a lack of identity in an increasingly competitive marketplace. During the first quarter, sales decreased 1.7 percent to $423.9 million from $431.1 million. Same-store sales decreased 6.8 percent for the quarter.
Zell/Chillmark, a Chicago-based investment group headed by Zell, purchased 70 percent of the store three years ago. In the interview, Zell praised Dworkin, but admitted he is not happy with the current state of affairs at Broadway. Even while lauding Dworkin's progress, Zell said he must constantly consider other options for the future of the store.
"Nobody could be happy with the retail environment over the last three years," Zell said. "I think Dworkin and Broadway have made a lot of progress. The question you always have to evaluate is how does that progress relate to reality, other alternatives and everything else you think about when you make investments?
"Clearly the retail environment has recovered much more slowly than we would have envisioned when making this investment," Zell added. "The fact that we've had a few fires and a few riots and a few earthquakes has only compounded the issue. Unfortunately most of these things are totally out of my control."
Broadway operates 83 stores under the names The Broadway, Broadway Southwest and Emporium, with 71 of those units in California.

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