Broadway Stores Inc

Behind Monday's announcement that once-venerable Broadway Stores will be acquired by Federated Department Stores looms a question that has vexed the retail world for the last five years: Can the full-scale department store survive? The answer, industry analysts and executives say, depends on a simple premise: Department stores must persuade women shoppers to once again buy the merchandise that they have for sale.

Amid the sorrow that another department store is closing, shoppers and retail industry experts Tuesday speculated that Federated Department Stores Inc.'s acquisition of the struggling Broadway Stores Inc. portends good things for Orange County, where shopping long has been considered something of an art form. "Since emerging from bankruptcy in 1992, Broadway never knew what it wanted to be when it grew up," said Jan Wohlwend, general manager of Anaheim Plaza.

A merger of Broadway Stores Inc. and Federated Department Stores Inc. could dramatically shake up the California retailing scene, resulting in substantial layoffs, the closure of small apparel makers and higher prices for shoppers, retailing experts and economists said Monday.

In a deal that would erase the venerable Broadway name from the Southern California retail landscape and likely trigger store closures and layoffs, long-struggling Broadway Stores Inc. agreed Monday to be acquired by Federated Department Stores. If the merger is approved by regulators, Cincinnati-based Federated said it hopes to sell some stores and will convert the remaining Broadway Stores sites--which include The Broadway, Emporium and Weinstocks--into Bullock's, Macy's and Bloomingdale's.

Broadway Stores Inc. investors, whose shares were worth $2.875 each at Monday's close, will end up with substantially more than that if the Federated Department Stores Inc. bid goes through. But many buyers of Broadway stock in recent years will still take a loss on the deal, at least initially. Broadway holders would swap each of their shares for 0.27 Federated shares. Based on Federated's closing stock price of $29.50 on Monday on the New York Stock Exchange, that means the deal is worth $7.

Allen I. Questrom, who made his mark as a top retailing executive a decade ago while running the Los Angeles-based Bullock's chain, is making another bold impression in California: He's thinning out his competition. Questrom is now chairman and chief executive of Federated Department Stores Inc., the giant department store holding company headquartered in Cincinnati that agreed Monday to buy ailing Broadway Stores Inc., an 83-store chain based in Los Angeles.

1896: Arthur Letts opens the Broadway Department Store, a 4,000-square-foot shop at 4th Street and Broadway in Los Angeles. 1950: The company becomes Broadway-Hale Stores with the purchase of Hale Bros. Stores of Northern California. 1969: Broadway-Hale acquires Neiman-Marcus and Waldenbooks and merges with Emporium Capwell Co. of San Francisco. 1972: Philip M. Hawley is named president. The company purchases Bergdorf Goodman of New York. 1974: The company is renamed Carter Hawley Hale Stores.

Eyes on Broadway Stores: The retail industry this week will be abuzz with speculation about the next move of Broadway Stores Inc. Some vendors have put merchandise deliveries to the Los Angeles-based chain on hold as pressure mounts for it to shore up its ailing finances. In April, the company put 12 out-of-state stores on the sales block but so far has an agreement to sell only one. The company could decide this week on offers for the remaining 11 stores.