W&L SEEKS BUYERS FOR 4 STORES
Byline: Carol Emert
WASHINGTON — Woodward & Lothrop Inc. announced Friday that it will try to sell four stores and is seeking a partner for a possible merger, sale or capital infusion.
Robert Mang, chairman and chief executive officer, said in an interview Friday at W&L headquarters here, “There are interested parties [for the whole company] who are financial buyers as well as interested parties in the retail arena.” W&L, which includes the John Wanamaker stores, has been cutting costs in a battle to turn around its bottom line since it filed a Chapter 11 petition in January 1994.
Rosemary Sisson, a retail analyst with Salomon Bros., questioned the viability of a 25-unit department store chain. “One way or another, these guys need to become part of a bigger entity.”
Potential investors might be put off by W&L’s size, Sisson noted. The company had sales of $835 million last year.
However, she added, the W&L and Wanamaker names still have value, and the company has kept its stores very clean, attractive and well maintained. In addition, it occupies some prime real estate in Washington, where good sites are hard to come by.
While the company announced Friday that it was seeking to sell four underperforming department stores, Mang said additional assets would not be sold off piecemeal.
“What we’re saying is, if someone is interested in all or a significant part of the company, we would be interested in talking to you,” Mang said.
A W&L spokeswoman said the company is proceeding with plans to file a stand-alone reorganization plan. “But the company has an obligation…to see if there’s a solution that will return more for the creditors. We’re fulfilling that obligation, and we’re working in good faith with the creditors. We’ll just have to see what emerges.”
Mang declined to identify the possible investors. He said he signed confidentiality agreements with the parties doing due diligence.
Despite the possibility of a merger or sale, W&L is prepared to file a reorganization plan March 23, if Bankruptcy Court in New York refuses to extend W&L’s exclusivity period until late May, as W&L has requested.
Mang said he expects the court to grant the extension, and that the company will be able to file a consensual plan before the next deadline. “Sixty days is enough time to resolve the outstanding issues,” he said.
Mang said that the four units up for sale — three W&L units in suburban Washington and one John Wanamaker unit in Jenkintown, Pa. — represent only about 5 percent of the company’s $835 million in annual volume. He said all stores, including the four up for sale, are profitable. However, those four units are well below industry productivity standards, doing under $100 in sales per square foot.
The company has closed one full-sized store since entering bankruptcy, a John Wanamaker unit in Westchester, N.Y., which was sold for $12.9 million to Brook Shopping Centers. It closed March 8. With the newly announced closings, which are all slated to happen within six months, the company will own 13 Wanamaker stores in the Philadelphia area and 12 W&L stores in the Washington area.