172 years old and growing Success: Since May Department Stores bought Lord & Taylor in 1986, the chain of specialty stores has more than doubled. Now, it's about to open four stores in the Baltimore area.

September 13, 1998|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

As chief executive of a major department store chain, Marshall Hilsberg says he knows what consumers want, and "value" is high on the list. That's not to say he'll promise his shoppers the lowest price on, say, a sweater.

Hilsberg, after all, heads Lord & Taylor, the New York-based granddaddy of department stores that has built its reputation on American style and status, a chain expanding at a rapid pace and entering the Baltimore market this week -- and Hilsberg is not about to compete with Wal-Mart.

But if it's merino wool or cashmere sweaters customers are after, "you'll find outstanding quality at the best prices you can find," Hilsberg said. "On comparable merchandise, we're very well priced. I don't care what the pocketbook is, everyone wants value."

Staying focused on customers -- primarily those seeking the latest designer fashions in the core areas of career, casual and special occasion -- has helped Lord & Taylor survive where other chains have disappeared. After 172 years, it touts itself as America's oldest specialty store.

But powering its growth of the past decade -- with new locations from New York to Chicago to Dallas and now Baltimore -- is the muscle of parent firm May Department Stores Co., the nation's second largest department store operator, with 369 stores. St. Louis-based May also owns The Hecht Co., the Baltimore region's dominant chain, as well as six other regional department store chains across the country.

Since May bought the 31-store Lord & Taylor chain in 1986, the number of locations has more than doubled. May views the chain as one of its strongest drivers of growth, because of its strong brand name, national scope and upscale specialty store niche -- it doesn't have departments like home furnishings -- that allows it to compete with other May divisions, even within the same mall.

On Wednesday, Lord & Taylor will come to White Marsh Mall, opening a 120,000-square-foot, two-level store on the former site of Woodward & Lothrop. Soon after, Lord & Taylor stores will open in Annapolis Mall, on Sept. 30, and in Owings Mills Town Center and The Mall in Columbia, both in early November.

"At Lord & Taylor, our business has continued to be quite healthy, and May views it as a growth vehicle based upon its performance and the great acceptance of the brand name," Hilsberg said. "We service the Washington market aggressively, a little Delaware and into Pennsylvania and New Jersey. Baltimore was a jumping-over point we had not penetrated, and the opportunities started to avail themselves."

Those opportunities came about, in three of the malls, after several years of talks and negotiations with The Rouse Co., owner of all but Annapolis Mall.

Lord & Taylor fit in with Rouse's plans to re-energize its malls, said Anthony Deering, Rouse's chief executive officer.

"Our overall objective is to have each property dominant in its market," Deering said. "This will contribute to Owings Mills, White Marsh and Columbia being the premier retail properties, in a combined way, in the state, not just the region."

For May, the Lord & Taylor expansion is part of an overall growth strategy for all divisions that calls for opening 20 new department stores a year for the next five years and remodeling or expanding 100 stores in the same period -- a total $3.6 billion investment.

This year alone, May is investing $725 million, partly to open 19 new stores and expand seven. Among the new stores opening this year are 10 Lord & Taylors, including the four in Maryland, and three Hecht's.

"One of May's key objectives is to compete on speed, to move with decisiveness and agility, to quickly bring the most desired merchandise to the customer," Gene Kahn, May's new president and chief executive officer told shareholders at the company's annual meeting in May. He added that the company also sought to "key in on the most sought-after brands, by responding aggressively to trending ideas, vendors and items."

The biggest obstacle to May's growth plan could be finding spots to put its stores. Many analysts and consultants agree that America already is over-stored and over-malled.

"There's just not a lot of new mall construction here domestically," said Jeff Stinson, a research analyst with Midwest Research in Cleveland.

But analysts also agree that May is better equipped than most to succeed.

In fiscal 1997, May racked up its 23rd consecutive year of record sales and earnings per share. Sales climbed 7 percent, or 3.6 percent on a store-for-store basis, to $12.4 billion. Earnings per share jumped 10.3 percent, to a record $3.11.

"May has just been a very consistent grower for a long, long time," said Sally Wallick, a retail analyst with Legg Mason Wood Walker Inc. in Baltimore. "It's impressive because retail is cyclical. When you have a recession, typically the consumer is pulling back. They've been able to grow sales and earnings year in and year out."

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