Lord&Taylor plans to close White Marsh mall store

32 unprofitable branches to shut as upscale chain tries to stay competitive

July 31, 2003|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Squeezed by competition for middle America's dollars from discounters, May Department Stores Co. said yesterday that it will close 32 unprofitable Lord & Taylor department stores, including one at White Marsh Mall, to focus on locations where it can compete as an upscale retailer.

The closing of the Northeastern Baltimore County store marks the second time Lord & Taylor has bailed out of a Baltimore-area mall since it entered the local market in 1998.

Its two remaining area stores are in Annapolis and Columbia. It closed its store at Owings Mills Town Center last year.

The 75 people who work at the 120,000-square-foot White Marsh department store will be among 3,700 in 15 states who will lose their jobs.

The closings will leave the chain with 54 stores in 11 states and Washington.

"The May Co. is buckling under the weight of the most ferocious competition the retail marketplace has seen in decades, possibly ever," said Kurt Barnard, president of Retail Forecasting, an Upper Montclair, N.J., consultant.

"There's no point in pouring valuable resources into stores that don't seem to hold out much promise of being turned around," he said.

May is trying to reposition its Lord & Taylor stores at a time when department stores are facing an identity crisis, said David Fick, a managing director for Legg Mason Wood Walker Inc. in Baltimore who tracks shopping mall retail.

"It's a business that's been attacked by the category killer and big box [stores] - and Wal-Mart," Fick said.

"Many products that were exclusively available through department stores 25 years ago are available through other channels today.

"You've got Crate & Barrel and Pottery Barn and virtually a whole list of category killer types from Pier One to Ikea."

The closures are part of a strategy to return the New York-based granddaddy of department stores, founded 177 years ago, to its heritage as an upscale fashion retailer, a May spokeswoman said yesterday.

"The stores that we are divesting simply were not supporting that strategy," said Sharon Bateman, the spokeswoman. "Each of them has not achieved a certain level of performance."

The targeted stores account for nearly 40 percent of Lord & Taylor's locations but barely 20 percent of the chain's sales, the company said.

Sales at May's department stores open at least a year - considered the best gauge of a retailer's performance - fell 5.9 percent in June from a year earlier and were down 7.2 percent in the fiscal year to date, May reported.

The company, which also owns Hecht's and 10 other department store chains, does not break out same-store sales by chain.

Lord & Taylor reported sales of $1.9 billion in its last fiscal year, which ended Jan. 31.

May's declining sales reflect a downturn afflicting department stores across the United States, which have seen sales drop each month since December 2001, a retail index by Bank of Tokyo Mitsubishi shows.

From February though June this year, same-store sales at department stores dropped an average of 3.9 percent. At the same time, mass discounters, such as Wal-Mart Stores Inc. and Target Corp., posted an average increase of 2.3 percent.

"The broader economy is affecting where people shop and how people shop and the frequency, and department stores have become basically discounters of apparel, too. The consumer buys on the sales, and not really otherwise, " said Michael P. Niemira, a vice president at the Bank of Tokyo Mitsubishi, who tracks retail sales by sector.

"There's a shift that has caused less traffic to those stores and basically a lower value purchase simply because of the discounters."

Lord & Taylor built its reputation as a purveyor of style and status, but it has more recently obscured that niche and now falls in terms of pricing somewhere between Hecht's and Macy's, Barnard said.

Taking the chain upscale will be a challenge, he said.

"There's not an easy way to do that," Barnard said. "They're known as middle-of-the-road department stores ... and now they're trying to attract a totally new audience."

Some of Lord & Taylor's core markets will include parts of Connecticut, Chicago, Boston, Philadelphia and the New York and New Jersey metropolitan area.

In Maryland, it will keep stores in Chevy Chase, Kensington and Gaithersburg in addition to Annapolis Mall and The Mall in Columbia.

May said it does not have firm dates for the closings. Stores will stay open until the company finds a buyer for buildings it owns or tenants for those it leases.

"The profitability has been declining in the industry for a couple of years, so [May] is making a financial decision, whereby they need to improve the profitability of the company," said David P. Campbell, a retail analyst for Davenport & Co.

"They're moving to more of an upscale concept, and that model doesn't work in these [targeted] locations."

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