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21 Department Stores to Close in Southland

The plan by Macy's owner, which is buying Robinsons, means uncertainty for malls and shoppers. In the U.S., 68 sites will shut.

July 29, 2005|Leslie Earnest and Roger Vincent | Times Staff Writers

In a move that will rattle shoppers and alter the complexion of malls throughout Southern California, Federated Department Stores Inc. said Thursday that it intended to close 68 locations -- including 21 in the region.

The closures will begin early next year after Federated, the parent of the Macy's chain, completes its $11-billion acquisition of May Department Stores Co., the operator of Robinsons-May.

The changes will affect more than 13,000 workers nationwide, though Federated Chief Executive Terry J. Lundgren said that "the vast majority" would be shifted to other stores.

When the deal was confirmed Feb. 28, the companies announced that they expected to shutter dozens of stores. On Thursday, Federated said it would close 14 Robinsons-May locations in Southern California, notably those at Glendale Galleria, Del Amo Fashion Center in Torrance and MainPlace in Santa Ana. A store in Bakersfield also will close. The company, which is based in Cincinnati, also will close seven Macy's stores, including those at the Galleria at Tyler in Riverside and the Shops at Mission Viejo.

Robinsons-May stores that are not closed will be converted to Macy's beginning next year, spelling the end to one of the oldest and best-known names in Southern California retailing. A few may be converted to Bloomingdale's, a chain also owned by Federated. Nationwide, 330 Federated-owned stores will convert to the Macy's nameplate.

The move will be felt not only by mall owners but by clothing makers and media outlets, including The Times, that carry both Macy's and Robinsons-May advertising. The change will greatly affect California, where 28 malls have stores under both banners, more than in any other state, and vendors sew clothes for both chains.

The disappearance of the Robinsons-May brand -- itself the product of a retailing merger -- surprised and saddened many shoppers.

"Oh, no! We don't want that," said Jose Moreno of Sun Valley, who was shopping for kitchen equipment and electronics at the Robinsons-May at the Glendale Galleria. "Macy's is more expensive."

Moreno, a retired police officer, said he and his wife, Bertha, bypassed malls closer to home to shop at least twice a month at the store.

More broadly, Federated's announcement will usher in a period of uncertainty for mall owners and retailers whose businesses could be hurt -- at least temporarily -- while the shifting occurs.

"It impacts much more than just the anchor tenant -- it affects the whole balance of the mall," said Richard Giss, head of consulting firm Deloitte & Touche in Los Angeles. "The worst thing for a mall is dead space."

But the closures also will create opportunities for a variety of retailers, from discounters such as Wal-Mart Stores Inc. to upscale Nordstrom Inc. And the changes could ultimately give shoppers more variety if, for example, a mall ends up with a Macy's at one end and a Wal-Mart or a Target at the other.

Wal-Mart will consider the properties but has no plans to fill any of the vacancies, spokesman Eric Berger said.

He said the company was successful in redeveloping shuttered department stores in Baldwin Hills and Panorama City.

The store closures could give lower-priced retailers -- such as Kohl's Corp., which entered the Southern California market with its first stores here in 2003 -- more chance to nibble away at traditional department stores. But the closures also will wipe out one of Macy's main rivals -- Robinsons-May -- so that Federated can better compete, retail experts say.

"The first way to gain back market share is to stop losing it," said Marshal Cohen, chief industry analyst for market research firm NPD Group. "They now control the department store business in the mall."

Robinsons-May, Macy's and other midrange department stores have battled for more than a decade to push back an army of competitors, including discounters such as Target, and so-called category killers such as Bed Bath & Beyond. More recently, consumers have been drifting to higher-end retailers, such as Neiman Marcus and Nordstrom.

Federated's moves could create a prime opportunity for Nordstrom, which has yet to open stores in 13 of the California shopping centers where stores will be closing, said analyst Neely J.N. Tamminga of Piper Jaffray & Co.

Not that Federated would toss out the welcome mat for Nordstrom, one of the most popular stores among Southland shoppers.

"We believe that Nordstrom is very likely the last company in the world Federated wants to sell locations to," Neely said. "However, there are fewer and fewer possible buyers with all the consolidation occurring in retail."

Nordstrom, which operates 45 stores in California, said it would examine the targeted stores.

Federated, which owns about 50% of the sites to be vacated, will work with mall owners to develop "what's best for the mall," CEO Lundgren said. In some cases, he said, that could mean replacing empty shops with restaurants or movie theaters instead of department stores.

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