NEW YORK--May Department Stores is negotiating with Broadway Stores Inc. to purchase its 31-unit Northern California and 12-unit Southwest divisions, sources said Tuesday.
At Broadway's annual meeting on June 16, chairman Samuel Zell told shareholders that he wouldn't rule out selling the struggling chain's two divisions.
Zell could not be reached Tuesday, but a Broadway spokesman said, "We have a policy that we do not comment on rumors." May Co. also declined comment.
Broadway's Northern California division operates 22 Emporium/Capwell stores in the San Francisco area and nine Weinstocks in central California. Its Southwest division, which Broadway said it has considered selling since April, includes seven stores in Arizona, three in Nevada and one store each in Colorado and New Mexico. The company also operates 40 stores in Southern California.
Analysts have noted that Zell, whose Zell/Chilmark investor group owns 70 percent of Broadway, probably is most concerned about timing a sale of all or parts of the business to maximize their value.
Broadway, which emerged from Chapter 11 in October 1992, continues to be hurt by weak sales, heavy debt and a fuzzy identity in an increasingly competitive market.
Broadway saw its first-quarter sales decrease 1.7 percent to $423.9 million and same-store sales drop 6.8 percent.

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