Macy’s Inc. is adding two stores to its roster through a bankruptcy auction, an unusual avenue for growth for the national department store chain.
The company successfully bid on two Gottschalks leases, paying about $2 million to occupy a 107,000-square-foot unit in River Park in Fresno, Calif., and a 150,000-square-foot unit in the Visalia Mall in Visalia, Calif. Macy’s said both stores are expected to be open prior to the 2009 holiday season after minor remodeling and refixturing.
Until the Gottschalks deal, the $25 billion, 840 plus-unit Macy’s had not tapped the recent wave of retail bankruptcies for real estate. “We are always looking for opportunities, but the core of our strategy is to focus on existing stores,” said Macy’s spokesman Jim Sluzewski. “When a competitor drops out of the marketplace, we think Macy’s is well positioned to pick up that share.”
He noted that since the Gottschalks bankruptcy earlier this year, Macy’s has decided to beef up cosmetics in central California, with such brands as Estée Lauder, Lancôme and Clinique. “That was a strong category for Gottschalks and our cosmetics assortment is very strong.”
When Mervyns went bankrupt last year, Macy’s got more aggressive marketing denim, and with the Fortunoff bankruptcy this year, Macy’s beefed up its gift registry.
The retailer has generally added locations through acquisitions and building stores in new centers. But Macy’s made an exception with Gottschalks because it regards Fresno as a big market where the company has been understored, currently operating three units, one for women’s apparel and accessories, another for men’s and children’s and a furniture store.
Vasalia is a new market for Macy’s, but considered the same media market, making it easy and cost effective to advertise the new stores.
With the two Gottschalks locations, “Macy’s is expanding its presence and serving new customers in the important Central Valley market,” said Terry J. Lundgren, chairman, president and chief executive officer of Macy’s.
The stores are expected to employ about 250 Macy’s associates. The company hopes to take possession of them next month. They are currently conducting going-out-of-business sales. This year, Macy’s is closing 11 stores and opening eight, including the Gottschalks units.