May to Close 32 Lord & Taylor Stores (3700 Jobs Lost)

The New York Times ^ | July 30, 2003 | THE ASSOCIATED PRESS

[Willie Green]

For education and discussion only. Not for commercial use.

ST. LOUIS (AP) -- May Department Stores Co. said Wednesday it will close 32 of its Lord & Taylor stores in 15 states and two other stores under different names, leaving about 3,700 workers without jobs.

The targeted stores -- representing 38 percent of Lord & Taylor's sites but just 19 percent of the company's sales -- are in markets where Lord & Taylor lacked a major presence and generally had a small number of stores, the retailer said.

St. Louis-based May, pushing to focus on its core markets, will still have 54 Lord & Taylor stores in 11 states and the District of Columbia.

May also plans to close a Famous-Barr store in Des Moines, Iowa, and a Jones Store site in Omaha, Neb.

The company said it will take a charge of approximately $380 million, of which about $320 million -- or 70 cents per share -- will be recorded in this year's second quarter ending Saturday.

May said it expects the closures to produce annual savings of about $50 million, or 10 cents per share, of which $20 million will be realized in the second half of 2003.

``In evaluating our long-term strategic objectives, it is clear that Lord & Taylor's customers and May's are best served by concentrating our efforts and resources on those markets with strong performances,'' said Jane Elfers, president and chief executive of May's Lord & Taylor division.

Dates for the closings have not been decided, May spokeswoman Sharon Bateman said.

May said it would provide severance pay and enhanced retirement to eligible workers affected by Wednesday's announcement.

Last month, May said it laid off about 1,500 workers in sales management and support positions, amounting to about 1.3 percent of its overall work force.

In addition to Lord & Taylor, Famous-Barr and The Jones Store, May operates such stores as Filene's, Foley's, Hecht's, Kaufmann's, L.S. Ayres, Meier & Frank, Robinsons-May and Strawbridge's. The company also has 191 David's Bridal shops and 259 After Hours Formalwear sites.

May currently has 446 department stores in 45 states, the District of Columbia and Puerto Rico.

Shares of May rose 81 cents, or 3.5 percent, to $24.26 each in afternoon trading on the New York Stock Exchange.

[Helms]

WG: You take some heat on this forum for perceived negativity, but I appreciate your work. This economy is going thru massive changes.

[Willie Green]

Thank-you. While some of the "heat" may come from truly brainwashed bushbots, I'm convinced that the most hateful comments come from left-wing globo-marxists who are hopeful for the economic collapse of our great Republic.

[discostu]

I don't see a change here except smart business. When 38% of your stores generate 19% of your sales those stores are a failure. Stores fail in good economies too.

[Helms]

"I don't see a change here except smart business. When 38% of your stores generate 19% of your sales those stores are a failure. Stores fail in good economies too."

I suspect it mirrors economic hits in certain parts of the country, yet the point is job loss. WG simply posts the aftereffects of a Major Economic Realignment and Globalization. Regards

[discostu]

I don't. I suspect it's how the ball bounces, some locations don't work for some stores. May tries to image as upscale, not all neighborhoods are ready for upscale.

WG simply posts bad news because his pagan God Pat Buchanan hates Bush. There isn't a major realignment and even if there was globalization would be showing any effect on a single retail outlet. Walgreens is opening 20 more stores in Tucson, where Willie's post of that? We're getting a new resort hotel too, most expensive in the state, doesn't post that. He'll post crap about one company laying off 12 guys but he steadfastly refuses to post any kind of good economic news. There's plenty out there, but not in WG land. If you want to hear bad news fine, but don't pretend it's a complete picture because it's not.

[Helms]

I have always considered myself somewhat of an outsider on FR. I have also witnessed the barbs you have sustained.

Fortunately we do not wallow in much of the negativism prior to 02, and especially 2000.

My motto is and always has been that "there is more that joins us than separates us".

[Helms]

I have always considered myself somewhat of an outsider on FR. I have also witnessed the barbs you have sustained.

Fortunately we do not wallow in much of the negativism prior to 02, and especially 2000.

My motto is and always has been that "there is more that joins us than separates us".

[VOA]

Stores fail in good economies too.

And consumers can be fickle. You see stores even like The GAP and other clothing stores
take major hits when their buyers zig when the consumers zag.

It's up to the stores to be cagey enough to not lose the farm with a terribly-wrong
bet, especially for more than one season.

[Willie Green]

I suspect it mirrors economic hits in certain parts of the country, yet the point is job loss. WG simply posts the aftereffects of a Major Economic Realignment and Globalization.

True. While I am empathetic towards those who have lost service jobs in the retail sector, I don't believe that our nation is in any grave danger of losing the retail sector itself. The upscale facilities formerly occupied by Lord and Taylor will likely be reoccupied by other merchants offering cheaper, lower quality merchandise, paying lower rent on the facilities, and of course, rehiring employees at lower wage levels.

This downward spiral will repeat itself over and over and over again in the retail sector as our overall economy continues to decline to Third World parity. The job losses in the manufacturing/mining/farming/construction/high-tech sectors are of much greater concern. Those are the occupations that add-value and create wealth. With the loss of those industries, everything else gradually slides into decay.

[oldtimer]

You have to have your clinton stacked in this brusing retail market.

Jos. Bank and Brooks Brothers are duking it out: people have gone casual, Kohl's, Sears, etc., are big boys who know how to play the game. And Target is supportive of the "gays".

It's rough out there, and my wife can smell a bargain within twenty miles.

Then, of course, is the internet shopping.

[discostu]

I don't see a downward spiral. Upscale store are still doing fine. All this represents is one store that expanded in the wrong place at the wrong time. Happens. It's not a sign of economic strife it's not a sign of any kind of trend, it just shows bad decisions being made. The two most successful malls in Tucson are going upscale, the one that's dieing went downscale and did it stupidly (their big mistake was adding high draw businesses external to the mall but make it so that people could go in and out without hitting the mall proper, the theater does great, the Home Depot does great, the Krispy Kreme does great, the mall is 60% empty).

It's all about the quality of the decision. Open up an upscale store in a bad neighborhood and it's going to fail. Open a downscale store in a good neighborhood and it's going to fail. Expand into a saturated marketplace (upscale or down) and not have anything to seperate you from the competition and you'll fail. Businesses fail based on bad decisions, good economy or bad.

When I see 38% of the stores drawing 19% of the income I see a large number of bad decisions. Too much expansion into places they shouldn't have gone. A lot of people worshiped the new economy in the boom-boom 90s and forgot the fundamentals, the dot-coms weren't the only people to forget the fundamentals, they just did it more dramatically.

[Helms]

Thank you

"We're getting a new resort hotel too, most expensive in the state"

Ah yes the service sector. I don't and won't pretend. I relate to WG when it comes to both Pittsburgh and NC but part ways when it comes to Buchanan.

Plenty of Mac Jobs and Family Dollar stores.

Do you not see the repercussions of Global Capitalization and the increasing income disparities?

Well wishes to you in your fine state, however the bloom is off the rose here in NC.

[discostu]

Exactly, one of the hallmarks of the 90s boom was that a lot of people figured out how to match the success others had achieved (and really this started in the 80s but the companies didn't go national until the 90s). K-Mart had ruled the discount retail market, they were king of the hill and felt no fear. Then Mervyn's (in the guise of Target) and Sam Walton figured out how it worked and are right now putting K-Mart out of business. McDonald's was king of fastfood, then Subway not only figured it out but figured out how to do it with something that wasn't burgers, now McD's is taking on water and Subway is crossing McD's threshholds in half the time. The world figured out how to make better donuts than Dunkin' and Krispy Kreme is dancing on their corpse.

This is the normal process of shaking out, better carnivores are showing up to take the money older slower dumber carnivores stopped earning.

[KevinDavis]

That is true. I sure someone else will overcome KK or overcome subway.

[discostu]

It's service jobs when it's done, though not McJobs big resorts pay good bucks. It starts with a couple million dollars in construction.

Not only do I not see repercussions from "global capitalization" I don't see an increase in income disparity. That's something that everybody has been predicting for 30 years and, like all the other doom and gloom predictions filling the airwaves since Nixon was in the White House, are simply not coming true.

[discostu]

Eventually, that's the nature of the beast. That's business evolution. Part of the problem is that every major business inovation is (thanks to IRS and FTC regulations) public knowledge. McD's figured out how to do the franchise business model, then others copied, then somebody figured out how to do it better, now folks are copying that, and somebody will figure out how to improve on that.

Meanwhile market dynamics change. One of the things that pushed Subway past McD's is that they figured out a way to make the food in front of people in a way that's not much slower than the service you get at McD's with the bin. Fast cook to order with no mysteries about what's in the food. And one of the things that had been going on is those hidden video shows, people were starting to wonder what went on behind the wall, McD's can't answer that question. Add to that increasing health consciousness and the inherrent better health of subs over burgers and you get a market that was ripe for Subway and doomed for McD's.

But the tide will turn again, it always does. The companies that last are the ones that surf. Look at Coke and Pepsi. Increased health consciousness should be bad on soda companies, and it is bad on the soda market. But they're diversified all over the place, they own fruit juice and sports drinks and water. All the money they're losing on their "primary" products they're earning elsewhere. Diversification and adaptation, and never get complacent.

[MatthewViti]

One of the Lord & Taylors closing is right where I live and another close by.

[Helms]

I do notice you talking MCD's and Subway, how about something that will build equity, send children to college and allow for a secure retirement?

I admire your attitude.

[discostu]

Well Toyota and Nissan are building factories in America and Honda is expanding existing factories. Of course in the meantime American car manufacturers are still having quality and reputation issues so they're not seeing very much growth.

My attitude is to aknowledge the truth. The truth is the doom criers are wrong. The truth is there's never a time when there are no companies shrinking. The truth is this "economic downturn" is a freaking joke. The truth is globalization has been going on since the 60s and anybody thinking it's suddenly going to change the economic picture now just hasn't been paying attention.