Woodies takes on Nordstrom Challenge to mall expansion in Annapolis raises questions

May 07, 1992|By Lorraine Mirabella | Lorraine Mirabella,Staff Writer Staff writers Tom Easton and Ross Hetrick contributed to this article.

Meet Woodies, defender of the environment, protector of the public's right to know and all-around good neighbor in Annapolis for 28 years.

Enter Nordstrom, upscale retailer, outsider, and, Woodies alleges, polluter.

That's the dirt Woodward & Lothrop Inc. is spreading about the newest tenant of the Annapolis Mall.

Readers of The (Annapolis) Capital found a full-page ad in their paper on Sunday, signed by Woodies and accusing Nordstrom and county officials of bulldozing the environment and due process.

The ad says Anne Arundel County and St. Louis-based May Centers Inc., which owns the 120-store mall on Jennifer Road, secretly signed an agreement last October covering road and drainage improvements.

It also alleges that building a 260,000-square-foot expansion for Nordstrom and some 45 smaller merchants will ruin wetlands, endanger drinking water supplies and increase pollution and traffic.

And yesterday, after lobbying county and state officials and appealing to the public, Woodies went one step further, filing a challenge against the mall expansion with the Anne Arundel County Board of Appeals.

"I don't know that I've seen anything that overt," said Ken Gassman, a retail analyst who follows Woodies for Richmond, Va.-based Davenport and Co. "I guess there must be some bad blood there we don't know about."

But Woodies insists that it's nothing personal.

"This is not a Woodies-Nordstrom issue at all," said G. Gerard Barnett, senior vice president of real estate for Woodward & Lothrop, which has a store a mile from the mall in Parole.

"We have no objection to the mall expansion or Nordstrom coming in," he added. "We're trying to say if there's going to be expansion -- this would hold true if Woodies was a part or not -- it has to be done right and it's not being done right."

Residents and environmentalists take issue with Mr. Barnett's view.

Mall officials discussed expansion for three years, proposing plans that residents and planners scrutinized while developing a growth management plan for the area. The management plan adopted by the County Council required the mall to scale down (( its expansion.

"That mall was studied for three years. I wish everything else was studied that well," said Helen Ann Laurie, who lives a mile from the mall and was well aware of the road and drainage agreement Woodies alleges was signed secretly.

"May Centers tries to do everything as though they lived in this neighborhood," she said. "The mall has been a good neighbor."

While Elizabeth McWethy, president of the Weems Creek Conservancy, saw some truth in Woodies' accusations of potential danger to the nearby creek, she said commercial development as a whole, rather the mall alone, should share the blame.

"When you use truth that way, that's not a very good way to use it," she said.

Squabble seen as sour grapes

As mall managers and Nordstrom fans see it, the squabble is nothing more than a case of sour grapes.

"It's ridiculous. Everyone has scrutinized this thing to death," said Kathryn J. Dahl, an attorney for May Centers. "They're just using that to advance their competition concerns."

Rodney Haynes, vice president of development for May Centers, said the company tried to entice Woodies to the mall for several years, but the retailer rejected an offer. The store canceled later meetings with mall management, he said.

"We find it curious," he said. "Now that we have Nordstrom, a competitor, these issues are suddenly of concern to them."

Analysts agree that the addition of a Nordstrom to Annapolis Mall in the summer of 1993 could hurt the nearby Woodies.

"They should be a little bit worried," said Robin Olin Oegerle, director of retail research for Ferris, Baker Watts Inc., a Washington-based investment company.

Noting that the mall is one of the few major shopping complexes in that area, Ms. Oegerle said people may may simply decide to go to Nordstrom instead of leaving the mall to go to Woodward & Lothrop.

"They may just go for the convenience," she said.

However, Ms. Oegerle said the two department store chains do serve very different markets. While Nordstrom is very upscale with full service, Woodward & Lothrop has more of a mass appeal with a wider variety of merchandise.

Tough times for Woodies

The flap comes as Woodie's continues to report poor financial results. This week, the privately held retailer disclosed to a small investor group holding Woodward & Lothrop bonds some numbers for its last fiscal year, which ended Feb. 1.

Sales declined 4 percent to $838.3 million from $873.4 million, according to Salomon Brothers, the original underwriter of the securities, which selectively releases the information to customers.

Cash flow -- an important measure of earnings that excludes depreciation, interest payments, taxes and other non-cash charges -- was $21.7 million for the fiscal year, less than half the $50.9 million paid in interest on the chain's debt.

While Woodie's is suffering, several competitors seem to be gaining in strength, said Salomon analyst Jan Dillow. Sales for Hecht's rose to $1.2 billion from $1.03 billion, nudging it past Lord & Taylor, formerly the largest subsidiary of Hecht's parent, May Department Stores.

Meanwhile, Nordstrom sales increased by almost 10 percent, in part because of some additional stores but also strong gains nationwide, including the Washington area.

Nordstrom officials say they're disappointed, but won't be deterred by the Woodies' challenge. "Our schedule for building in the hands of the mall. This appeal could potentially delay that schedule," said David Mackie, vice president of real estate for Nordstrom.

4 "I have no idea why they're filing this appeal."

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