GOTTSCHALKS PURCHASES LAMONTS, GAINING FOOTHOLD IN NORTHWEST
Byline: Kristin Young
LOS ANGELES — Gottschalks completed its acquisition of essentially all the assets of Lamonts Apparel Inc. Monday, substantially strengthening the regional chain’s impact in the Northwest and boosting its unit total more than 50 percent.
The acquisition — which includes leases, fixtures and equipment — will add 34 units to the Gottschalks chain to give it a total of 95 stores. Gottschalks said it plans to enhance merchandise assortments at the stores to include fragrances and cosmetics, as well as a stronger representation of footwear, housewares and home textiles.
In April, the bankrupt Lamonts said it would begin going-out-of-business sales in May and that 38 of its stores would be acquired by Gottschalks, the Fresno, Calif.-based operator of more than 60 department and specialty stores. Soon after announcement of the deal, the Lamonts headquarters in Kirkland, Wash., closed and operations were moved to the Gottschalks headquarters in Fresno, Calif.
The original purchase price of $19 million rose to $20.1 million before consummation of the deal. Of the 37 units ultimately included in the agreement, the lease for one store was sold and leases for two others were terminated.
“This acquisition allows us dramatic expansion in the Northwest in immediate fashion,” Jim Famalette, president and chief executive officer of Gottschalks, told WWD. “It would have taken us a significant amount of time to find quality locations like these” without such an acquisition.
Lamonts stores range in size from 40,000 to 80,000 square feet. Included in the acquisition are 19 stores in Washington, seven in Alaska, five in Idaho, two in Oregon and one in Utah.
Gottschalks operates 42 department stores and 19 specialty stores, most in California and only a few in Oregon and Washington, the two states in which the two previously separate operations had overlapped.
“Our employees are in [Lamonts] store locations now beginning the process of cleaning and sales training,” Famalette added. “Later this week, we will begin remerchandising and restocking [the stores] with all brand new goods.”
In a statement, Famalette noted that the company had “been able to retain the majority of Lamonts’ store managers and associates. Seven stores will be undergoing immediate renovations during the next month. Our marketing effort will begin shortly with an aggressive television, radio, newspaper and direct mail campaign, as well as a major credit card solicitation.”
The company said the expansion into Lamonts’ territory “presents an opportunity to significantly leverage corporate overhead and buying power.”
The converted stores are scheduled to begin reopening in late August with all units in operation by mid-September.
With the addition of the 34 stores, Famalette said he projects Gottschalks’s sales volume to reach $800 million in 2001. Last year, Gottschalks recorded sales volume of $568 million, while Lamonts notched sales of $200 million.
Gottschalks said it hopes to improve the sales volume and profitability of the former Lamonts stores through the introduction of cosmetics, fragrances and apparel brands not previously carried by Lamonts. Through a credit card solicitation to consumers in the new Northwestern markets, Gottschalks hopes to add to its current of more than 600,000 credit card customers.
Gottschalks reported it lost $841,000, or 7 cents a share, for the quarter ended April 29, compared with a loss of $1.1 million, or 9 cents a share, in the first quarter one year ago. Sales for the quarter were $120.9 million, up 8.8 percent over the $111.1 million sales mark recorded in 1999. First-quarter, same-store sales were up 6.9 percent.
Gottschalks’s shares closed at 6 3/8, up 1/16, in New York Stock Exchange trading Monday.