Ian Ritter is national online editor for GlobeSt.com/RETAIL.
BIRMINGHAM, AL-In a highly anticipated deal in the retail industry, Charlotte, NC-based department store operator Belk Inc. is acquiring Saks Inc.'s Saks Department Store Group for $622 million. The deal will give Belk 25 McRae's and 22 Proffitt's stores located throughout 11 Southern states. Company executives expect the deal to close some time this quarter.
Saks executives also say they are exploring the sale of their northern department store division, which includes 143 units in 12 Midwestern states under the Bergner's, Boston Store, Carson Pirie Scott, Herberger's and Younkers banners. The company is also exploring the sale of its 43-unit Club Libby Lu, a specialty, "tween" apparel chain.
Locally based Saks Inc. is keeping its 38-store Parisian chain, which operates units mostly in the South. The company is also holding on to four McRae's in Alabama. There are no plans to sell the upscale Saks Fifth Avenue chain, which operates 57 department stores and 52 outlets, executives say.
Belk, which bills itself as the "largest privately owned department store company in the United States," owns 228 Southeastern units. Over is last fiscal year, which ended Jan. 29, the company reported a same-store sales increase of 4.2% over the previous year. Sales increased 8%, to $2.4 billion, and net income jumped 11.3%, to $12.6 million.
The Belk-Saks deal comes at a time of rapid consolidation in the retail industry. K-Mart and Sears recently merged in $13-billion deal, and Federated Department Stores is acquiring May Department Stores for $11 billion. The 51-store Neiman Marcus chain has also put itself up for sale.
Commenting on the consolidation yesterday during a quarterly conference call, Paul Charron, chairman and CEO of Liz Claiborne, the apparel giant that sell clothing to many of chains, said it is "certainly not a normal time" in the industry.
"It means that companies like ours will have to proceed very gingerly to avoid getting hung out to dry by well-meaning but distracted merchants who may not be in total control of their own destinies," he said. "It means that we must hold retailers accountable for their actions."
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