WOOLWORTH CHANGES NAME, UNVEILS EXPANSION PLANS
Byline: Mary Hurley
WATERTOWN, Mass. — At an eventful annual meeting here Thursday, Woolworth Corp. officially changed its name to Venator Group Inc., showcased its Foot Locker prototype, nixed a proposal to get out of Germany and disclosed expansion plans.
The Foot Locker prototype, launched last November here at the Arsenal Mall near Boston, site of a former bomb factory, “is a major initiative for us,” said Roger N. Farah, chairman and chief executive officer of Venator. “We think it really sets us apart from other industry players.”
The prototype combines three of the company’s athletic specialty chains under one roof, Foot Locker, Lady Foot Locker and Kids Foot Locker. Shareholders sat near the 11,000-square-foot store, in front of the scoreboard from the old Boston Garden, home of the Celtics and Bruins. The scoreboard hangs from the mall’s roof and bears the Foot Locker logo.
The interlocking stores have distinctive looks and lots of energy, with pulsating music and flashing videos. At Kids Foot Locker, there’s an oversized representation of a kid’s closet dominated by a Godzilla-inspired basketball net and giant ball. Lady Foot Locker, on the other hand, has a soothing ambience, with H20 spa products and comfortable teal chairs for reading cookbooks being sold, such as the American Heart Association’s “Quick and Easy Cookbook.”
Currently, the company operates six remodeled Foot Locker formats. More than 300 are planned to be operating by year’s end, with a handful featuring the larger, three-in-one format.
The Venator name was announced in April and approved by shareholders at the meeting, despite opposition from Greenway Partners, one of the company’s largest shareholders, with a 6 percent stake.
“A major disappointment,” was what Gary K. Duberstein, Greenway’s managing director, said of the Venator name. He urged the company to “rethink” the name change and consider using The Sports Authority, the sporting goods and athleticwear chain that Venator acquired for $750 million last month. That name more accurately reflects the company’s current focus on athletic-inspired products, Duberstein said.
“If this is the name that was chosen, I shudder to think what names were discarded,” he noted. He said the Venator name, “at present, conveys nothing. There may be a few Latin scholars who know what it is, but I don’t think there are enough Latin scholars out there to sustain present sales.”
But Farah defended the name, telling shareholders, “The Woolworth name no longer reflected who we are. We’re excited about the name. We hope you are.” Farah contended that Venator, Latin for “sportsman,” is an appropriate name for the company.
“It is sad,” he added, “when a business and a name moves on. It is also sad when a business hasn’t been successful in 30 years.”
He was also bullish on The Sports Authority acquisition. The 202-store chain, which recorded $1.5 billion in sales last year, “is clearly the vehicle for us,” he said. “It helps us diversify,” from primarily footwear. “The Sports Authority today has just touched the surface of what the potential could be.”
Farah estimated that 10-12 former Woolworth stores will be converted into Sports Authority this year.
Sports Authority makes up 22 percent of the company’s athletic specialty sales, he said. The Athletic Group, the company’s largest and most profitable business, makes up 57 percent of specialty sales and operates 3,588 stores worldwide, including 3,083 stores in the U.S., located primarily in regional malls. The group includes Foot Locker, Lady Foot Locker and Kids Foot Locker, plus Champs Sports and Eastbay Inc., a direct marketer of athletic merchandise acquired by the company in January 1997.
The Athletic Group had worldwide sales of $3.7 billion in 1997, an increase of $108 million or 3 percent, from 1996.
Farah said that Venator has a “very aggressive” $1 billion, three-year capital program. By the year 2000, the company expects that nearly half of its 7,200 stores will be “less than three years old,” he said.
“We need to catch up with our new stores to get ahead of our customers,” he said. “It should have a significant impact on our results.”
In 1998, the company plans to spend more than $300 million for 719 new stores and 582 remodels.
Shareholders also nixed a proposal by Greenway to sell the general merchandise operations in Germany for a stock buyback. Alfred Kingsley, Greenway senior managing director, said the company should dispose of all noncore businesses. “This is a fantastic opportunity to become a pure athletic company,” Kingsley said, citing the general merchandise business as the reason why company stock is “underperforming.”