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May Stores Says It's Considering Selling 2 Chains : Discount Units' Funds Would Help Buy Stock

June 28, 1989|From Associated Press

ST. LOUIS — May Department Stores Co. said Tuesday that it is exploring the possibility of selling its Caldor and Venture discount chains.

Divesting the two general merchandise discounters would enable the retailer to more easily pursue its intention to concentrate on its department store and shoe businesses.

"The divestiture of Caldor and Venture will allow May to focus on the operations and expansion of our higher-return and faster-growing businesses," said David C. Farrell, May chairman and chief executive.

May, one of the largest retailers in the country and owner of Lord & Taylor, Hecht's, Sibley's, plus other department stores and specialty shoe chains, including the May Co. in Southern California, said it anticipates using a significant portion of the proceeds from a possible sale to buy back its stock.

The company's stock closed Tuesday up $1.75 at $41.875 in New York Stock Exchange trading.

The remainder of any sale proceeds would be spent on general corporate purposes, including investment in the department store operations and shoe businesses, the company said in a news release.

May management has been working to restore Caldor to higher levels of profitability and had recently expressed optimism about Caldor's prospects.

Caldor, which operates in the Northeast, was taken over by May in 1986 as part of its acquisition of Associated Dry Goods. Caldor's operating earnings were $50 million in 1988 on sales of $1.6 billion.

May launched Venture in 1970. It operates in the Midwest and last year had operating income of $81 million on sales of $1.3 billion.

Both Venture and May sell a range of items including hard line goods, such as appliances, and soft line goods, such as clothing.

Thomas A. Hays, May's president, described Caldor and Venture as two "well-positioned businesses with excellent management and committed associates."

As a condition of any sale, May will insist on provisions regarding jobs, compensation and benefits for Caldor's and Venture's employees.

Retail industry analysts had expected that May eventually would shed Caldor and Venture.

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