FINKELSTEIN, CRYSTAL SAID VYING FOR MACY'S UNITS

Byline: David Moin

NEW YORK--Macy's specialty stores, put up for sale by the parent Federated Department Stores, could wind up in the hands of an ex-Macy executive.
Among those rumored to be in the running is Edward S. Finkelstein, a former R.H. Macy chairman and chief executive, now a consultant. He launched the Macy specialty business in 1987, but due to Macy's bankruptcy in 1992, never had the chance to really roll it out.
Richard Crystal, who was chairman of Macy product development and oversaw the specialty stores, is also said to be interested, but it couldn't be determined whether he was interested for himself or for Merry-Go-Round. He left Macy's in July to become chief executive officer of the bankrupt Merry-Go-Round chain, which has about 1,000 stores. Finkelstein was not available for comment and Crystal declined comment.
Others rumored as potential bidders include The Limited and Bain Capital, which is reportedly seeking to buy Ellen Tracy, the bridge company, and has extensive retail holdings, including Duane Reade, the drug store chain, and Specialty Retailers Inc., based in Houston. The Limited had no comment and Bain officials could not be reached. The Macy specialty stores, with $128.4 million in sales last year, represent a small part of Federated's overall volume of over $14 billion, including Macy's. There are 98 Aeropostale units and 30 Charter Club units. One source said an Aeropostale store is on the drawing boards for East 86th Street here.
Aeropostale started in men's wear with a unisex appeal and then added women's. It's been compared to The Gap, though its product line seems to be more of a hybrid of The Gap and Banana Republic--not too basic and not as fashionable as Banana Republic. Charter Club is classic, traditional sportswear, lingerie and accessories geared to women 25 to 55 and priced in the moderate to better range. Some consider it a cheaper version of Ralph Lauren.
Last week, Finkelstein was named to the board of American Eagle Outfitters, a specialty chain based in Pittsburgh, selling casual apparel footwear and accessories. The company also broadened the responsibilities of Michael Scandiffio, vice president and general merchandise manager, to include men's merchandise while continuing to oversee women's. According to one source, American Eagle has been checking out specialty store real estate on the market as well. However, Finkelstein is believed to be trying to line up some backing for a bid independent of American Eagle and would like to run the Macy stores with his family, including his sons Daniel, a former Macy's West ceo and a merchant, and Mitchell, who has sourcing connections in the Far East. Finkelstein's last foray into retailing was in China, where he opened and closed one moderate-priced sportswear store.
Taking over the Aeropostale stores is a daunting task, considering the business will no longer have Macy's product development machine behind it. In addition, specialty stores are having a rough year and underperforming the rest of the retail industry.
Federated has put Aeropostale and Charter Club up for sale to raise cash and focus more on its core department store business. Last year, Federated liquidated the money-losing I. Magnin business, which was based in San Francisco.
However, Macy's Aeropostale, according to some market sources, has some potential and generates decent volume. Federated's plan is to sell the Aeropostale name and the sites, while with Charter Club, just the real estate is up for sale. Federated wants to hang on to the name for its private label. Last week, a Federated official said "nothing has changed" regarding its plan to sell the stores. Federated has retained Merrill Lynch to advise on the potential sale.
At one time, the Aeropostale label was sold at the Bullock's division and numerous Macy stores around the country, in addition to the Aeropostale stores. However, other Macy labels, such as I.N.C., another Gap knockoff, were rolled out in the Nineties, and Aeropostale was pulled out of Macy's and Bullock's units, with the exception of the Herald Square flagship.
Federated picked up the mall-based specialty units through its acquisition of R.H. Macy & Co. in December 1994. A group of lingerie stores, called Fantasies by Morgan Taylor, was eventually discontinued, but the label is still sold in Macy's department stores.

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