Lucky Stores executives met into the evening behind closed doors at Dublin, Calif., headquarters but made no announcements Tuesday as speculation swirled that the retailer had found a buyer for its troubled Gemco unit.
The embattled company, which operates Lucky and Food Basket stores in addition to the Gemco membership department stores, intends to restructure in order to thwart a $1.79-billion takeover bid by New York investor Asher B. Edelman. Analysts have viewed Gemco as the company's biggest headache, and thus the unit most likely to be sold.
A consensus formed among Southern California supermarket industry executives Tuesday that Dayton Hudson, the Minneapolis-based parent of Target and Mervyn's, is the most likely bidder for Gemco's 110,000-square-foot stores, most of which are leased.
Policy on Rumors
Tom Langenfeld, a Dayton Hudson spokesman, said the company's policy is to decline comment on rumors about acquisitions. His comments seemed to leave open the possibility, however, that negotiations are under way. "Dayton Hudson is quick to disclose any kind of action that would be material," he said. "If we, in fact, had an agreement, we would be quick to disclose that."
A deal for Gemco's stores, particularly the 22 Northern California locations, would make sense for Dayton Hudson. The stores could be converted to the Target format, an upscale discounter with stores of about 100,000 square feet. Dayton Hudson currently operates only Mervyn's in Northern California.
There is a precedent for this type of acquisition. In 1982, Target, which normally buys its locations, leased 28 former FedMart locations in Southern California and spent substantial amounts remodeling them. For a time, it closed the stores, where workers had been represented by the United Food and Commercial Workers, and then reopened them with non-union staff.
Couldn't Be Reached
Gemco's employees are also represented by that union, whose representatives could not be reached for comment. Of Lucky's 68,000 employees, an estimated 25,000 to 30,000 work in the Southland.
Also rumored to be interested in some Gemco locations was Wal-Mart Stores, a fast-growing discount retailer with stores in an area spanning the Sun Belt from South Carolina through Texas. A spokeswoman at the Bentonville, Ark., headquarters said that those rumors are "not accurate" and that buying California locations would not make sense for the retailer, which has no distribution facilities in the state.
In trading on the New York Stock Exchange, Lucky shares rose 25 cents to $37.125.