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Macy Plans to Phase Out Magnin Chain


R.H. Macy & Co. will announce plans today to phase out the 118-year-old I. Magnin chain by putting eight of the 12 I. Magnin stores up for sale and establishing different specialty stores at the remaining sites.

I. Magnin stores will continue to operate for now. However, if Macy is unable to find a buyer for the eight stores, the New York-based retailer is expected to close these locations before it emerges from bankruptcy reorganization in late December as part of a planned merger with Federated Department Stores, sources said Thursday.

Macy will disclose the four stores it will retain when it unveils its sales and conversion plan for I. Magnin today. A list of four stores has been drawn up, but executives Thursday were still considering changing some of the selections on that list, sources said.

I. Magnin, an upscale specialty apparel retailer headquartered in San Francisco, has one store in Phoenix and 11 stores in California. The California sites are in Beverly Hills, Woodland Hills, Newport Beach, Palos Verdes, Pasadena, San Diego, Palm Desert, Walnut Creek, Palo Alto, Carmel and San Francisco.

The phaseout of I. Magnin would mark the final chapter in one of California's oldest retailing sagas. The company was founded in 1876 by Mary Ann Magnin, an accomplished seamstress who began modestly by designing and making clothing for individual customers in San Francisco. She named the company after her husband, Isaac, who was not involved in the business.

A likely scenario, sources said, is that the four stores Macy retains will be converted into either Macy's Men's stores or men's stores in the Bullock's chain, which Macy owns.

There had been speculation that Macy would shut down or sell part of the financially troubled I. Magnin chain and convert some of the remaining stores into Bloomingdale's, a chain operated by Federated. However, some industry analysts said the I. Magnin sites are too small to operate as Bloomingdale's stores.

Meanwhile, Macy has been expanding its Bullock's Men's and Macy's Men's stores, and the size of I. Magnin stores is suitable for such a conversion.

Macy has been quietly holding discussions with possible buyers of eight sites. Jacobson Stores Inc., a specialty apparel retailer based in Jackson, Mich., and the St. Louis-based May Department Stores, operator of the Robinsons-May department store chain, are among the companies that have taken part in such discussions, sources said.

Officials from those two retail companies could not be reached for comment. May Department Stores operates Lord & Taylor, a chain that may want to establish itself at some I. Magnin sites. Jacobson may also want to establish some of its stores at I. Magnin sites.

Although Macy plans to abandon I. Magnin as a store format, it will retain and expand the profitable I. Magnin catalogue business. By doing so, Macy can also use the expertise and labor of catalogue division personnel to help launch and operate a television shopping channel.

Macy announced last year that it had forged a partnership with Don Hewitt, producer of CBS' "60 Minutes" program, to develop a cable shopping channel. Like catalogue operators, television shopping enterprises take orders and deliver merchandise by mail. Federated has indicated that work on the shopping network will continue after it merges with Macy.

The impending merger of Federated and Macy--a deal approved in August by the companies' two boards--may have marked the beginning of the end for I. Magnin. The retailer has been hobbled in recent years by the weak California economy, flagging nationwide demand for apparel and fierce retail competition, and there was speculation that the chain would be closed or sold before the Federated-Macy merger agreement.

The speculation increased after Federated successfully wooed Macy because the combined company is expected to consolidate or close inefficient or unprofitable operations. Macy does not release the earnings of its separate units, but some industry analysts have said that I. Magnin has been unprofitable in recent years.

The venerable department store company was known almost from the beginning as a favorite place for upscale shoppers. I. Magnin stores in San Francisco were the first retail businesses in the city to be furnished with fine cabinetwork, elegant showcases and gilded mirrors.

I. Magnin began to sell ready-to-wear clothing in 1909. The company grew rapidly in the early 1900s, opening branch shops in exclusive hotels in Santa Barbara, Del Monte, Coronado and Pasadena, and then full-line stores along the California coast during the go-go retail explosion of the 1950s and '60s.

In 1944, I. Magnin and Bullock's merged as a corporation. I. Magnin and Bullock's were acquired by the Cincinnati-based Federated Department Stores in 1964. In 1988, Macy acquired Magnin and Bullock's from Federated, only to eventually strike a deal to merge with that company.

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