May Department Stores Co. said yesterday that it will merge its Hecht's and Thalhimer's divisions Feb. 1, a move that the St. Louis-based retailer said would save $25 million a year but will result in the closing of seven Thalhimer's stores and a net loss of up to 500 jobs.
The consolidation will actually add as many as 250 jobs in the Washington area, because Hecht's essentially will take over Thalhimer's, which is based in Richmond, Va., and the staff at Hecht's headquarters in Arlington, Va., will grow. But Jim Abrams, a May spokesman, said up to 750 jobs may be lost in the Thalhimer's division.
"We'll be looking throughout the May Co. to see where we can place individuals," said Mr. Abrams.
He insisted that the strategy was not exclusively a cost-cutting move. "Any move like this, you don't do unless you can better serve the customer," Mr. Abrams said.
The shift will not cause major changes for shoppers in the Baltimore area, because Hecht's will go on more or less as it always has, Peggy Disney, Hecht's spokeswoman, said. The 15 remaining Thalhimer's stores will change their names to Hecht's, the company said. "Thalhimer's will not change substantially," Mr. Abrams said. "There's a similarity of merchandise" offered by the two chains.
Mr. Abrams said that the reorganized Hecht's will be the biggest department store chain of the May Co., which had $10 billion in sales last year, including about $900 million at Hecht's and $400 million at Thalhimer's. Ms. Disney said that Hecht's, which now has 28 stores, will have 43 stores after the merger, placing it among the nation's 10 biggest retailers.
The move came as May announced a small increase in third-quarter earnings, compared with the same months in 1990. The company said it earned $91 million during the quarter, which ended Oct. 31, up from $90 million in the third quarter of last year.
The earnings included a $9 million pretax charge for consolidation costs, but that was offset by a $10 million pretax gain on the sale of a store location, the company said.
Mr. Abrams said that May merged Hecht's and Thalhimer's, rather than other chains in the May group, because their geographic areas overlap and they sell similar products. Thalhimer's stores are all located in Virginia and North Carolina; Hecht's has stores in Baltimore and Washington, and four Virginia stores near the Washington metropolitan area.
The chairman and president of Hecht's, Thomas D. Fingleton and Irwin Zazulia, will run the combined chain.
The Associated Press reported on a Richmond news conference at which Thalhimer's said that it will close two stores in Richmond and others in Virginia Beach, Va., and Greensboro, Winston-Salem, High Point and Raleigh, N.C.
May's announcement of the merger did not mention either the job cuts or the store closings, asserting that the move would actually create up to 250 jobs because of the additions at Hecht's headquarters.