Byline: David Moin

NEW YORK — I. Magnin, the 118-year-old West Coast specialty chain that catered to the carriage trade but never caught up to changing demographics, will start liquidating all its stores after Thanksgiving.
The I. Magnin catalog, which accounted for about $30 million of the chain’s $360 million in sales last year, will be continued, offering some measure of preservation for one of retailing’s most venerable names.
The details were announced Friday by Magnin’s parent, R.H. Macy & Co., and Federated Department Stores, which is taking over Macy’s. They confirmed reports published in these columns last week. Four locations — Palm Desert, Woodland Hills, Palo Alto and Walnut Creek — are expected to be converted to Macy’s or Bullock’s stores. Magnin’s said it is considering options for its other eight stores — in San Francisco, Phoenix, Beverly Hills, Carmel, Newport Beach, Palos Verdes, Pasadena and San Diego — and its Oakland clearance center. It might convert some of those units to Bullock’s or Macy’s, the company said.
There have been reports that the I. Magnin flagship on San Francisco’s Union Square could be folded into Macy’s, which wraps around the Magnin’s site on two sides. Jacobson’s is reportedly interested in the San Diego, Phoenix and Newport Beach stores, which are more spacious and have better layouts than the other units.
Jerry Magnin, whose great-grandmother, Mary Ann Magnin, founded the chain in 1876, is another interested party. He revealed Friday that he tried to buy the chain from Federated for $40 million plus assumption of debt.
“I have been working on it for three months,” said Magnin. He said he learned Thursday there would be no deal. Asked why, he said, “Your guess is as good as mine.”
Federated had no comment.
“I indicated to Federated last week that I would consider less than all of the stores, even though my preference was to buy it intact. It’s already been cut back too much by Macy’s. Yesterday, they told me there would be a liquidation sale. Personally, I feel the business is worthless after a liquidation sale.”
Magnin, who owns two Polo/Ralph Lauren stores in Beverly Hills and Redondo Beach, Calif., said, “I hoped to save jobs and the family name. I’m sad.” It’s possible Federated feels it could make more money through a liquidation sale and by converting units. It could sell a few units to another bidder.
The San Francisco Magnin’s flagship had a loyal following among the city’s most affluent citizens for decades. Unfortunately, its image — now considered old-fashioned by some — was allowed to linger for too long. It affected the whole chain. The business became plagued by problems ranging from merchandising and physical plants that reflected a Fifties mentality, to increased competition from more aggressive chains — such as Neiman Marcus and Nordstrom — expanding into Magnin territory.
The final blow might have been the impending takeover of Macy’s by Federated. Federated had owned Magnin’s until 1988, when it was sold to Macy’s with Bullock’s business.
Allen I. Questrom, Federated’s chairman and chief executive officer, said in a statement Friday, “After a thorough review of the prospects for I. Magnin after the Federated/Macy’s merger, we have concluded that such a high-end specialty store operation is not consistent with our focus on developing and expanding our core department store businesses.”
He added that while the chain has achieved “dramatic” improvement in operating results in recent months, “it is not expected to make a meaningful contribution to the combined company’s bottom line in the future.”
Reportedly, the chain lost as much as $10 million to $20 million in recent years and was only marginally profitable in other years.
One of Magnin’s major problems was the physical structure of the stores themselves.
“They couldn’t handle the traffic that you need today to build a business,” said one source. “They didn’t have escalators, they were very compartmentalized. It was all destination shopping, not impulse shopping. There was no flow.
“The competition was heavy in the last 10 years. A lot of stores came in. Neiman’s and Nordstrom’s took market share, and the trends shifted towards bridge, which Macy’s and Nordstrom did well with. Magnin’s business was always predicated on a higher price point.” However, one ex-official of the chain noted, “Magnin’s really does not have the pervasive selling culture that it needed. There are some incredible salespeople who should get picked up by other stores. They have great client books. But as a total store, the culture wasn’t there. Neiman’s and Nordstrom’s have spectacular selling cultures.”
According to one ex-employee, Magnin’s was in “the dark ages.”
“They felt they owned the California market and didn’t accept that you need to be competitive to grow,” the ex-employee added.
It did become more competitive in the late Eighties and early Nineties. Rose Marie Bravo, then ceo of the chain and currently president of Saks Fifth Avenue, is credited with restoring Magnin’s designer business and was able to get a lot of exclusives back into the store. She was succeeded by Joseph Cicio, who was chairman and ceo of Magnin from September 1992 until last July.
The catalog business has made strides and reportedly ran 11 to 12 percent ahead in sales during the first half of this year, after being flat the year before. It underwent a management and merchandising overhaul under Cicio’s direction. More affordable merchandise, more accessories, home products and fashion for a younger audience were added.
There were reports that Magnin’s catalog business, which operates in the Oakland site, might be integrated with Bloomingdale’s By Mail operation in Cheshire, Conn., for fulfillment purposes.
Another key change by Cicio was the addition of The Edge, a floor for younger customers, as he attempted to bring in a new audience and hang onto the old. However, sensing what might be about to happen, Cicio left last July. He was replaced by Scott Bowman, who has served as a caretaker for the business.
Sources said that among the conversions, the Magnin’s stores in Southern California would likely be converted to Bullock’s formats — large sizes or men’s, for example. The northern units, such as Palo Alto, are likely to become offshoots of Macy’s West.

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