Buyer for some Caldor's stores?

Kohl's is reported to want about 30 sites

January 14, 1999|By BLOOMBERG NEWS

NEW YORK -- Kohl's Corp., a fast-growing U.S. department-store company, is interested in buying about 30 stores from Caldor Corp. to speed its expansion in the Northeast, analysts and investors said yesterday.

Caldor, which has been in Chapter 11 bankruptcy since 1995, stopped paying suppliers last week. The regional discount chain has been negotiating with creditors who want Caldor to liquidate and sell its 145 stores to increase the amount they recover.

The stores Kohl's is looking at are in southern Connecticut and nearby areas, analysts said. Stores in the Northeast are coveted by retailers because property is expensive and hard to come by. The Caldor stores, which average 104,000 square feet and are mainly in strip centers, fit Kohl's average store size and plans to expand on the East Coast.

"Kohl's has been willing to pay a premium for a concentrated store base in one of the more attractive regions," said Thomas Buynak, director at Society Asset Management, which owned 27,385 Kohl's shares as of September.

Another potential buyer of Caldor stores is Dayton Hudson Corp.'s Target discount chain, which also has focused on Northeast expansion, said Kurt Barnard, a retail consultant and president of Barnard's Retail Trend Report.

Target is mainly interested in Long Island, N.Y., locations, Buynak said. Officials at Caldor, Kohl's and Target weren't immediately available for comment yesterday.

Kohl's operates about 214 stores, and is expected to open about 45 locations this year, said analyst Richard Church of Salomon Smith Barney in a report. If it buys the Caldor stores, some of the new store openings may be delayed until next year, Church said.

Shares of Menomonee Falls, Wis.-based Kohl's rose $1.8125, to $60.6875, yesterday. Shares of Minneapolis-based Dayton Hudson rose 93.75 cents, to $54.0625. Trading in Caldor's stock has been suspended.

The Caldor's chain includes 30 stores in Connecticut; 22 in Massachusetts; 43 in New York; 26 in New Jersey; 10 in Pennsylvania and eight in Maryland. It has annual sales of $2.5 billion.

Caldor's Maryland stores, all in the Baltimore area, likely would not be affected by Kohl's dealings with the company. Last year, Caldor closed its stores in Golden Ring Mall and in Westminster, along with seven in the Washington market.

Creditors of the Norwalk, Conn.-based retailer said the company is looking to sell about 30 stores, said Jim Rice of Bernard Sands, a New York firm that evaluates the creditworthiness of retailers for merchandise suppliers. The proceeds of the sale may be used to repay its pre-bankruptcy lenders, owed about $187 million, Rice said.

Caldor's pre-bankruptcy lenders have been the strongest proponents of the retailer liquidating because it could help the company repay them in full.

Caldor has been closing stores and trimming operating costs to move toward profitability. But creditors rejected an independent reorganization proposal in April aimed at ending the retailer's bankruptcy, and now it's unlikely that the unsecured creditors will receive any money, according to Caldor's December filing with the Securities and Exchange Commission. The unsecured creditors claim they are owed $400 million.

For the 13 weeks ended Aug. 1, Caldor reported a loss of $16.1 million, compared with a loss of $18 million in the corresponding period last year.

Caldor said in its December SEC filing that it does not expect to meet its fiscal 1998 forecast of $75 million in earnings before interest, taxes, depreciation, amortization and reorganization items.

Pub Date: 1/14/99

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