Belk Inc.’s corporate past as a collection of 112 partnerships that ran their own stores but shared a banner has shaped how the company grew to be a Southern department store force and how it operates today.
This story first appeared in the March 18, 2013 issue of WWD. Subscribe Today.
In 1888, the 26-year-old William Henry Belk mustered $750 in savings, a $500 loan and $3,000 worth of consignment goods to start the company with a 1,540-square-foot store called New York Racket.
Belk, according to the company’s history, thought the name made the Monroe, N.C., store sound big and would draw customers.
Something indeed drew customers. The entrepreneur, who partnered with his brother Dr. John Belk, had paid off the venture’s debts and made a $3,300 profit inside of seven months.
The slogan for that first store was “Cheap Goods Sell Themselves.” And while that positioning might not exactly fit the modern company, it does show an emphasis on value that helped the Belks as they traveled the South and found merchants to enter into partnerships.
“They would work with that [local merchant] and that person would be the face of the company,” said Brian Marley, executive vice president and chief financial officer of Belk.
The partnership structure endured for 110 years, until 1998, when they were brought under one umbrella with a shared financial structure. But that emphasis on the local merchant remained.
“It drives a lot of our culture today,” Marley said. “Store managers have been very important in our organization, as they have a lot of authority in their local market.”
Merchandising has been consolidated, but store managers are very much responsible for selling and connecting with their neighborhoods.
“You will see our store managers involved in the community, being on boards of local organizations, very involved in charities, but also very involved in customers,” Marley said. “That’s a big expectation and something they love and also something very entrepreneurial. We like for them to be empowered to serve the needs of the customer.”
Although the partnerships were pulled together in 1998 — prompting Belk to make public its financial results since it had more than 500 shareholders — it took through 2005 to really fine-tune the corporate structure.
“We were creating a corporate-run entity, hopefully without losing our entrepreneurial spirit in the stores,” said Marley, who joined in 2000 and said the company at the time was like “a $2 billion startup.”
The company’s stock is not widely traded, but shareholders receive money through dividend payments and can also sell their stocks back to the company in annual buybacks.
Once Belk found its footing as a single entity, it turned to growth and got out the checkbook for three acquisitions. The retailer bought 47 Proffitt’s and McRae’s stores from Saks Inc. in 2005 and the following year acquired fine jewelry firm Migerobe Inc. as well as 40 Parisian stores that were also owned by Saks.
But before long, recession threatened and Belk used its position as a privately held company to focus on building up reserves to weather the storm.
And so just as the economy contracted and the financial crisis hit, Belk was able to expand its cash and cash equivalents to $585.9 million by the end of 2009 from just $187 million two years earlier.
“We got a lot of our associates to rally around this need to build liquidity,” Marley said. “You get a lot of [employees offering] ideas, which are very useful, but you also get a lot of thought and people understanding what we needed to do.”
Belk’s turned a profit of $183.1 million on sales of $3.7 billion in 2011 — marking earnings growth of 189 percent and sales expansion of 65 percent over a decade earlier.
For the nine months ended Oct. 27, Belk’s profits totaled $78.8 million on sales of $2.62 billion.
Now, the company is looking ahead to its next phase with a new logo, new brand positioning and an added kick from e-commerce.
“Many of our customers shop online before they go into the store,” said Marley, who is stepping down this spring. “With mobile and the technologies that continue to evolve, that store experience will evolve and that store experience and that Web experience will merge.”